Teaching Kids About Money: A Lifelong Skill

With nearly half of South Africans considered financially illiterate, equipping children with money management skills is an essential responsibility for parents. Research by behavioural experts David Whitebread and Sue Bingham from the University of Cambridge reveals that children begin forming money habits as early as seven years old.

Niresh Gopichand, Director of Risk at Atlas Finance, stresses the importance of financial education in shaping responsible future spenders. Drawing on his professional experience, Gopichand highlights how understanding money, from budgeting to saving, is critical to improving literacy rates. He points out that the start of a new year, when families often budget for school supplies and other essentials, is an ideal time for parents to introduce fun and practical financial lessons.

“It’s a period when money decisions are visible and necessary, creating natural opportunities for children to engage in budgeting and spending conversations,” he says. “Money doesn’t have to be a mystery; it can become an exciting and empowering part of your child’s life.”

To make financial education engaging and impactful, Gopichand shares five creative ways parents can teach their children money lessons through everyday activities:

1. Make a Wishlist

Kick off the year by helping your children create a wishlist of items they’d like to purchase, such as school supplies, books, or toys. Collaborate to categorise these items into short-term and long-term goals. This exercise helps children distinguish between needs and wants and understand the importance of goal setting.

2. Budget Like a Boss

Provide your child with a small allowance to manage school-related purchases or recreational activities. Encourage them to allocate funds, track expenses, and balance their budget. This hands-on experience develops budgeting skills and demonstrates the value of financial planning.

3. Needs Versus Wants Challenge

Turn shopping trips into a learning opportunity by discussing whether each item is a “need” or a “want.” Encourage creative alternatives, such as reusing or repurposing items instead of buying new ones. This activity promotes critical thinking and smart spending habits. For instance, they can use stationery from the previous year if it’s still in good condition.

4. Hunt for Bargains

Make bargain-hunting a family adventure. Teach your children to compare prices, search for discounts, and find the best deals both online and in-store. This activity not only reinforces math skills but also demonstrates how patience and research can stretch money further.

5. Save Before You Spend

Set up a savings jar or use a digital savings tracker to help your children allocate a portion of their pocket money or gifts towards a meaningful purchase. Celebrate their success once they reach their goal, and introduce the concept of investing by opening a savings account or discussing small investment options for older children. This fosters delayed gratification and introduces basic financial literacy concepts.

“By teaching children that financial success starts with small steps, we set them up for a lifetime of smart money management,” Gopichand concludes. “Starting early equips them with the confidence to handle more advanced financial concepts, such as investing, borrowing, and building a credit profile as they grow.”

Early financial education not only empowers children to make informed decisions but also paves the way for a more financially literate generation. By integrating these practical lessons into daily life, parents can nurture responsible and confident money managers.