Give kids a head start

TEACH THEM: THE RIGHT SKILLS FROM AN EARLY AGE

Youngsters need to be taught about the value and appreciation of money. They are inquisitive and learn fast, even more so when they see how to reap the benefits of their hard work and savings.

Showing children the basics such as how to budget, spend and save will establish good habits for life, and the best lessons your children will receive will be from observing you in your daily life. Introducing kids to money and how it works should begin at home. “We want to avoid sending our youth out into the world without a good working knowledge of how finances function,” says Craig Hutchison, CEO Engel & Völkers Southern Africa.

The Possibilities

It is also possible to encourage your children to start working towards owning a property from a young age.

If you can manage to get your child to save a sum of money per month starting now, and increase by a small percentage each year, by the time they reach 21 they may be able to start climbing the property ladder.

They could use their savings as a bond deposit, to pay for bond and transfer costs or to fund their first rental deposit.

“Starting off with a property at such a young age will mean that they could potentially buy their second home by 25 and grow their portfolio from there,” Hutchison says.

Once your kids are in their teens or older you need to give them advice on the hidden costs of homeownership like taxes, home insurance, and interest on the bond, rates and water payments, maintenance and repairs.

Seven things kids really need to know

The concept of money. Money is a tool that makes it easier to get what we need and want, now and later. The value of working for money. Money doesn’t magically appear, it must be earned. The importance of saving and sharing. Teach them the 20-10-70 rule: Save 20%; give 10% and spend 70%.

The difference between needs and wants. For instance, clothes are a need but brand names are a want. How credit works. If you don’t pay all of what you owe, you will have to pay interest on the remaining balance. The benefits of investing. Between the ages of 8 and 12 children can learn that if you invest carefully, you can use money to make more money. The concept of net worth. This is the difference between total assets (what is owned) and liabilities (what is owed). This is an important measure of financial health.