From piggy bank to pocket: making money matter to kids

MIRAH LANGER

“The first piggy bank is for charity. This is about developing their kindness, empathy, and compassion,” says Bush, the co-author of Future-Proof your Child, in an interview with the SA Jewish Report.

“The second piggy bank is for savings to spend on something special in the short term.”

The length of time for the short-term savings, whether it be weeks or a few months, needs to be determined by the age of the child, says Bush.

“Remember, children need concrete learning, so the smaller they are, the shorter the saving time needs to be, and the quicker the purchase needs to happen.”

The final piggy bank should be used for savings that will be invested for long-term growth.

“This is the one where you might say to your child, ‘For every R20 rand you put in, I’ll double it, and you will be able to put it into your bank account.’”

This will even start introducing children to the idea of compound interest, Bush says, a critical element for children to learn as it is the first step towards understanding not just how to make money, but how to make wealth.

A wallet is necessary to teach children about value, which they best learn by dealing with cash.

“[Nowadays], a lot of what we pay for, we use credit and debit cards, store accounts, and internet banking. So there’s a lack of concrete learning in a cashless society.”

As such, it’s important to start by giving young children real pocket money every week – something which for older kids will take the form of an allowance.

Furthermore, by the time their children turn seven, parents should open a bank account for them. “It’s almost a rite of passage, and it’s important to make quite a big deal of it: Take your children into the bank, take photographs of them, and maybe take them out for a milkshake afterwards to celebrate, because this is the beginning of their saving and spending journey.”

Bush says parents needed to get rid of the idea that when it comes to children, they need to provide them with more than they ever had.

“The important thing is not the stuff that we give them, but the abundance mindset.”

That abundance mindset is “created through experience, working with real money, and teaching children how to grow wealth for the long term”.

In fact, says Bush, learning delayed gratification is probably a key lesson when it comes to teaching children about the value of money.

Another critical lesson for children to learn is to deal with consequences when it comes to spending.

“So, if they use all their pocket money to buy some ‘junk’ toy and sweets, and then there’s no money left, well then there’s no money left.”

She says discussion needs to be had with older children about the cost of possessions like cell phones.

Parents need to make agreements with their children, for example, about what will happen if the cell phone breaks and whether the children will be responsible for some kind of payment towards repairs.

“If children are not part of these conversations, then they have no idea how insurance works, or that there is an excess.”

The same principle can apply to children at tertiary institutions.

“Do you have an agreement with your children as to what you are going to pay for and what they are responsible for paying for? What if they fail the subject? Is it just expected that you will pay for a redo, or are they going to contribute?” asks Bush.

She says it’s likely that if children have to make some kind of financial contribution in the event of failing, it will ensure that they take their studies more seriously.

“The trap that we fall into is that we don’t connect money with effort. We don’t talk to our children about the fact that we work x number of hours a day in order to earn the money we earn.”

Parents need to chat to their children about what trading means. For example, the next time they have a doctor or dentist appointment, parents can explain how this professional is “selling their knowledge and experience to us for money”. Parents can then link this to the work that they do, allowing children to begin to conceptualise how money is made via energy and effort.

This also means that parents should not do things like simply paying money for raffle tickets from a school on the child’s behalf.

“What we should rather be doing is ensuring that we hand over the responsibility to our children to go and visit granny and grandpa, aunts and uncles, and knock on doors of friends. They need to absolutely, in a practical way, connect the dots.”

Bush says parents need to look for everyday teachable moments, whether it is making supermarket shopping fun by turning brand comparisons into a game, or playing board games like Monopoly.

For too long, money has been somewhat of a taboo subject. “It’s like sex; we don’t talk money and money goals,” she says.

Yet, the reality is that children are already the target of emotionally manipulative marketing campaigns.

“Children have been at the crosshairs of extreme marketing by big brands that tell them if you have this, you’ll be happy; if you have this, you’ll be part of the crowd; you’ll be acceptable. These have huge emotional connotations for our children. We need to have conversations with them about the difference between needs and wants.”