If you don't teach your children how to handle money, someone else will. And this is not the risk you want to take! We will show you how you can provide your children with the advantage you want them to have and prepare them so that they can understand how to work with money at any age.

Start Early
Children shape their habits based on who and what we expose them to. They are influenced by the environment and regularly learn based on what they see. If you make it clear to your children that getting something they want immediately, is not always for the best; develop and repeat this lesson and they will find it easier to understand over time.

Teach by Example
Explain what you are doing when you issue a cheque, use an ATM card and pay for groceries. Avoid impulse buying, and tell children that you are waiting instead to be sure if you really want to make the purchase. Children are very attentive and learn many of their money-related concepts by watching you and copying your behaviour. 

Discuss Wants vs. Needs

One of the first steps to teach children the value of saving is to help distinguish between desires and needs. Explain that needs include basics such as food, accommodation and clothing, and all wishes are extras. You can use your own budget as an example to illustrate how spending desires should take second place. When it comes to effective financial management, children should understand their desires and needs. The difference between these two motivators helps them develop responsible spending habits. 

Show them the Value of Savings
It is natural for money to burn a hole in the pockets of younger children. It is important, however, that they discover the benefits of delayed satisfaction. If they want a toy or a game, suggest that you give up ice cream permission or other immediate pleasure and instead save several weeks to make the larger purchase. 

Explain the Difference Between Cost and Value
Help your kids understand that the cost or price of an item does not necessarily equate to the value. An item of lesser price may (better) serve the same purpose as one that cost higher. For instance, buying a car. While this may seem scary, your child will receive a license and may eventually get their own car. Help them to understand the cost involved in buying a particular type of car - the cost of the car itself, maintenance, gasoline, insurance etc and weigh it against how much value they will get. Then compare this against a lesser priced car and the overall value. 

Get them a Bank Account
If your child is a teenager, you should be able to set up an appropriate bank account for them. This takes money management to a higher level and (hopefully) prepares them to manage a much larger account as it ages. It teaches responsibility and puts in them a desire to build the bank account rather than deplete it. 

Let them have an Input into the Family Budget One of the best ways to teach children about money is to engage them in discussions about family budgets and some financial decisions. 

They will see how responsibly you approach bills and life problems. For instance, when making a decision to buy a house or a car, sit down with your kids and calculate all the costs involved. Let them understand the reason behind every decision you take. When you decide on a particular brand, let them understand it is due to the cost of maintenance. When you decide on the type of insurance, let them know why. 

This will help them understand and appreciate the thought process that goes into every financial decision you make. Of course, you may not have all the necessary information at your fingertips, but a little research will provide you with more info you may need about things such as the cost of car insurance, your mortgage, etc. 

Teach them to Give
Early adoption of non-profit habits can be a reward for both you and your child. Charity donations have been shown to have a beneficial effect on the brain. Help your children to develop the habit of giving by encouraging them to give 10% of their money to help others -and this is a habit they keep for the rest of their lives. 

Your Child and Virtual Money The use of cell phones and other digital technologies constitutes part of the daily lives of most of us. This means that your children are exposed to virtual money early on in their lives. Cover this aspect with them as well. Help them realise that virtual money is money too and must be managed prudently. 

Conclusion Given the importance of financial skills for navigation in life, it is rather shocking that schools fail to teach children actual money management. Most people want to teach their child financial responsibility, but talking about money can be difficult. However, it is your responsibility as a parent to teach your children this as you will be setting them up for a better financial future.