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Teaching kids about money

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Do your kids think money comes from the ATM? Relax, you’re not alone. In a world where money is becoming more and more invisible, it can be hard for kids to grasp the basic concepts of where money comes from, what you use it for and all the different ways you can ‘spend’, often without any actual cash changing hands. It can also be hard for them to realise that, for most of us, there is a limited amount of money available.  So when is the right time to teach your kids about money, and what do they need to know?

The sooner the better

first establishing the building blocks for good financial management will largely depend on their age, their interest and your own individual situation, but mostly the answer is now. At every age, there is something our kids can learn about money and how to manage it.

Pre-school

Pre-schoolers may have little to no interest in your spending habits until they can’t have the toy they want today. This is a great opportunity to start explaining that sometimes we have to save up to buy the things we want. The message may need repeating over time but this is laying a great foundation for a key financial truth that some adults may still struggle with. You may also notice pre-schoolers taking a cue from you and role playing shops or supermarkets, generally with some kind of exchange at the checkout. This is a great basis for understanding the transactional nature of a purchase – ‘I’ll give you this and you give me that’. Good start!

Primary school

When your kids hit school there are a couple of key things for them to understand. One is the physical aspect of money. What is Australian currency? How does it all work together? Learning to identify coins and notes and understanding that two fifty cent coins are worth the same as a one dollar coin is a big step in the learning process. Good opportunities for these discussions are around pocket money (if you give your kids pocket money) or when you give your kids money for the school canteen – try mixing up the denominations.

The second key thing at this point is getting their heads around the fact that, generally speaking, we have a limited amount of money at our disposal and that we need to choose carefully how we spend it. This can involve discussions about needs (food, water, shelter) and wants (iPad, skateboard, lollies). It will probably also involve some discussion about how we earn money AND how we access it.

In summary

As your kids get a bit older you can teach them about setting savings goals, working out a savings plan and saving regularly to reach a certain amount. Use a goal setting sheet and a savings calculator to help. Interest can be tricky to understand, but perhaps for now can be explained simply by saying that the bank pays you to keep your money in a savings account.

 

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Why choose IMB Bank?

Established in 1880, IMB has been helping people achieve their financial goals for 138 years. IMB offers a full range of banking solutions including home and personal lending, savings and transaction accounts, term deposits, business banking, financial planning and can arrange a wide range of insurance and travel products.

IMB has a growing branch network throughout the Illawarra, Sydney, NSW South Coast, the ACT and Melbourne. We have a lending specialist in every branch and a team of mobile lending specialists who will come to you. IMB members enjoy access to free automated phone and internet banking and a team of professionals who are just a phone call away at our locally based call centre.

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