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3 Jun 2013

TEACHING KIDS ABOUT MONEY

What an amazing facebook inbox I got from someone I never met. Teaching kids about money is never easy, I guess.
Except I started quite early that my son thought of it as a game. You get money, save some, use a little and be happy. When he turned 10 I taught him about the JSE and Satrix and he thought is a great idea to try that. But then, when he gets a R10 note he asks me to throw it in the stocks. He is yet to get a grasp of this. But I am very impressed with him. Naturally, I shared this story with women and mothers in one forum of people who don't want their kids to fall on the same financial disaster trap. One mother was kind enough to give me feedback as follows:

Hi SISA, I am so grateful for all your financial advise on teaching kids about money, its value and how to save it. I was owing my 14 year old son R200 for house chores and I decided to open an account for him at Nedbank. I put R100 into an investment account and another R100 into a savings account for him. I went ahead and told him that even R20 saved in his bank account will help towards his Varsity time savings and for buying stuff for himself later on. Thanks you very much for that wisdom.
 I love getting such feedback. When I started teaching my own child about personal finance I explained the value of compound interest. It changed how he looks at money forever. One mistake we make is underestimating the intelligence of a 4 year old. I also gave my son a reason to save. He was talking about owning a car at the time. I told him that he can save some of his money to buy his own car when he turns 18. That was a challenge and you don't dare a 4 year old boy.

His Satrix Indi has been doing extremely well. Its been a few months. I think three or slightly less. And my boy raked between 6 and 8% growth in this short space of time. Even when the JSE caught some flu, his index fund was just shaken a bit.

The best way to teach kids about money is leading by example. Be what you want to see in your kids. If you teach them that expensive and fashionable clothing makes a person, they will grow with that. If you, yourself throw money around and try to impress your peers, you are setting your son for a personal finance failure. Its never too late to start with children. They are like sponges and ready to absorb everything that comes their way. Keep the topic interesting and give rewards.

For every rand my boy saves he gets a rand from his mama. The more he saves the higher the match. He is quite lucky to get money gifts from family and our friends for his birthday. He saves most of it. It helps that he is such a cheap boy.

In your own house, are you teaching kids about money? What do you do to encourage your kids, grand-kids, nieces or nephews to save? 

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