While the rest of South Africa is carefully counting its coins and cutting back on recreational spending habits, it seems students live quite extravagantly. In fact, a recent report on student spending1, found that our country's students spend an average of R3 768 a month on expenses such as car payments, entertainment and alcohol - totalling R45 000 a year!
Furthermore, the report found that the money the youth are spending is not actually earned, but is given to them by parents and family members. This research points to the fact that students are, for the most part, all about “living in the moment” and instant gratification.
Perhaps this behaviour has been influenced by money lessons they were taught – or not taught - in their younger years? Armed with this knowledge on youth spending habits, it becomes imperative that we help educate children from an early age about money matters and budgeting. This will help them to make better financial decisions and minimise the financial burden on their family financing them as they grow up.
These lessons don’t need to involve huge lifestyle changes. Children can understand things fairly easily when we explain to them and include them in our thought processes. 1Life provides some helpful tips for parents wanting to help teach their children about finances.
Buy colourful jars and label them with your child’s name. Decide on a few simple responsibilities to give to your child. Such as tidying up the toys or feeding a pet. Then make a chart with these tasks in pictures and next to each, outline how much money will be earned each time the task is completed. Buy a few small items that your child can eventually "buy" with the coins. When they ask for the item of choice, help them count out the coins for it and if they do not have enough, tell him what they could do to earn more. This creates the opportunity to explain that everything costs money, and that money must be earned in order to purchase things.
Start to include your child in some financial decisions from an early age. For instance, explain, “The reason I chose this cereal, rather than that one is because it costs R5.00 less, but still tastes the same”. Then, the next time you go shopping, give your child some money and tell him/her to make choices about what to buy. While shopping, help them make financial decisions by asking questions like – “is this something we really need?”
Allow young teens to make spending decisions, even if you disagree with them; however encourage them to draw up a table of pros and cons before the spending takes place. Also alert children to the dangers of borrowing and paying interest by charging interest on small loans you make to them. Over time they will learn how expensive it is to rent someone else's money.
Remember, most importantly, children are never too young to start learning about money and the impact it will one day have on their lives; the more opportunities they have to work with money and manage it from a young age, the more money-smart they will be as adults.