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# Teach your kids to budget (toddler to teen)

Money, money, money…it’s a poor man’s world!

Life is not about money but without it we can’t survive. Therefore it is important to teach our kids money skills from an early age.

Age appropriate money skills

It’s a good option to play games with small children who can’t understand the value of money. To them it’s just paper and metal. Tearing up a R50 may have you in tears and them laughing with joy. Therefore I suggest getting the pictures of all currency on the web or in the One-Stop-Math-Shop, printing fake money and making up games.

Gr.R-7 Math: Fopgeld / Fake money (6 bladsye) [Word]

Game 1: Let’s Shop!

Take groceries from the cupboard, for example, rice, cereal, cookies, coffee, canned food, etc. Make up prices for each item and paste a little price sticker on each one. It doesn’t matter if the prices are ridiculous. Keep it simple, e.g. R5,50. So then you can teach him that he needs to give a R5 coin and a 50c coin to make up R5,50.

Game 2: Count

Pack out e.g. two 20c coins. Then let her pack out 20 stones (or any other concrete objects) for the one coin and 20 stones for the other coin. The add up how much 20 plus 20 will give you. Start with easier coins like 5c and 10c first. The more you do it, the better she will get at remembering 20 plus 20 gives you 40. Later on counting with concrete objects won’t be needed any more.

Tweens and Teens

Welcome them to the real world by making them work for their pocket money. For example:

• R2 per day for feeding the dogs
• R50 for washing and vacuuming the car
• R5 for vaccuming
• R10 for picking up the poop in the yard 🙂
• Etc.

Save!!

Make them save a percentage of their pocket money. For example, if they earn R100 for the month, R20 has to be put in a special zip lock bag in mom’s cupboard.

Ideally we would like to save that amount in a bank account. However, if the kid has access to their own card, they will be temped to use that amount. Same goes for parents. If you have some of your kid’s money in your account, you may be temped to use it for something and “repay them later”. In that case they are anyway not getting interest on their money, so you might as well save the cash at home and open a special account when there is enough cash to deposit.

Interest is your new best friend

As soon as you have enough cash to open a separate savings account for your child, make him stand with you as you EFT the 20% of his pocket money into his bank account. You can even have him write down on the first of every month how much money he actually put into his savings account and how much he has. The longer you save, the bigger difference there will be between the two amounts? Why? Because of compound interest! So this will be a real life way of explaining and experiencing compound interest.

What is compound interest?

Let’s say I put R1 000 in an account that gives me 5% interest per year.

Beginning of year 1: R1 000

End of year 1: R1 000 + 5% of R1 000 = R1 050 [R50 interest]

End of year 2: R1 050 + 5% of R1 050 = R1 102,50 [R52,50 interest]

With compound interest the amount of interest I receive each year will be a larger amount as the interest is calculated on a larger amount at the end of each year.

This is just a simple example. Most banks pay interest daily.