We all make several decisions, both conscious and unconscious, every single day.
As adults it can range from simply choosing your lunch, to the more complex decision of what mortgage to get. Our Kids are thankfully not pressured by lots of huge decisions yet – but how they deal with smaller decisions now can help prepare them for when they’ll be making important financial decisions later on in life.
We’ve pulled together some lessons and tips that can help teach kids how to make more considered choices.
LESSON: Opportunity cost
Opportunity costs are the benefits missed when you make the choice to take or do one thing over the available alternatives – the costs of the opportunity taken!
A lot of the time our short term wants and that immediate sense of gratification will overpower the longer term waiting that could have resulted in a better outcome. Sound familiar? Most likely because it’s a lesson you’re already trying to teach your kids.
RoosterMoney can help support your conversations with your kids when they are deciding if they want to spend their money or not.
TIP: Supermarket sweep
📽 Jump to scene – you’re at the supermarket and your child sees a magazine that comes with a free shiny plastic toy. You know they really want it for the toy, and not because they like the magazine, and you don’t want to have another argument of why that’s a waste of money.
That’s where their Rooster comes in! Whip out the phone and check their balance together. If they don’t have enough, better luck next time! If they do however, this is where you can have them consider if they want to get this magazine now or spend it on something better down the line.
Some tactics to employ:
💸”You’ve got enough, but once we spend it, it’s going to take a while to build that balance back up again!”
🎯”What about that goal you’re 60% of the way through saving? That’s gonna make it extra long until you complete saving for it.”
💰”I thought you really wanted to get [insert item here]? Why don’t we set it up as a Goal and we can put that money towards it?”
By giving them a fame of reference to compare their current want against, their decision making cogs will kick in. They’ll start to compare and contrast, and imagine what the longer term impact might be if they choose NOT to get it. These little gems can develop into more critical thinking down the line!
Don’t forget, if you do end up buying it, you can deduct it straight from their spend pot with a Remove. Hopefully after they experience buyers remorse they won’t be so quick to buy that item again!
LESSON: The value of things
© JackF – stock.adobe.com
How do you know what good value is or if something’s a bargain? We’ve all developed our compass of what’s expensive, what’s cheap and what’s good value for money. This will have come from making many purchasing decisions over time – the good and the bad ones!
A lot of these purchasing decisions (especially the pain of a bad one) comes when we’ve left home. But you can get your kids involved in reviewing and analysing options much earlier in life!
TIP: Bargain hunt
Put them in charge of the shopping list! For the younger kiddos, it may just be keeping them occupied with finding which goods are where in the supermarket. But for the older ones, you can challenge them to find the best deal!
Have them compare which product is the best value for the price. Show them how they can compare items using the cost per unit (e.g. litre/gram) on the price tag. Most supermarkets will display this information on the shelves so you can easily compare the cost of products. Or have them review the multi-buy deals against buying things individually. Is the offer really a better deal?
LESSON: Managing their own money
© Romolo Tavani – stock.adobe.com
One of our guiding principles behind how we designed the RoosterMoney app was to have features mirror functions in everyday online banking apps. But we’re very aware that normal online banking tends to be complex and boring! So we looked to make things fun and simple, while still sharing the same outcomes.
The reason we’ve done this is so our kids can start to learn about the concepts and functions that banking offers, in their very own pre-bank account!
📨 Money gets delivered automatically to their Spend pot on allowance day, like our salary does on pay day.
💰 The Save pot is like their very own savings account to stash savings aside.
💸 They can also set up a Split Allowance to automatically distribute money towards their pots like a standing order!
TIP: Set up their own login
The best experiences and learnings come when you try them out for yourself! So getting your kids to manage their own allowance will help them become familiar with money and banking concepts. You can set them up with their own login details where they can access a child view of their account. Find out how here!
With their account, they can transfer money between pots and set up goals for things they want to save towards. But don’t worry, they won’t be able to add any money – that’s a parent only feature.
The more involved they get, habits will start to form and these will stay with them through life!
Got any ideas or suggestions for what we cover next? Let us know at firstname.lastname@example.org and it might get featured in a future blog!