A kid’s understanding of money varies from child to child. However, teaching your child to be financially savvy can set them on the right path for life. Impulse buying for your child with your credit card because they say they want something or another child has that item and therefore they would like it too should be dealt cautiously while they are still young. This could cause you to misuse your funds and further throw them into misunderstanding the value of money and budgeting.
77% of kids aged 6-13 have money saved up
Most Australian parents have their children already set up on the right path by opening savings accounts for them, where they get to save the money that they earn. Roy Morgan Research released data that shows that 77% of kids aged 6-13 have money saved up. 79% of girls are more likely to save when compared to 75% of boys. The research interestingly shows that boys have more stored away compared to girls with the average amount being $279.90 that is saved up. Girls on average managed to put away $268.68 away. Although girls receive more money in a week through various household chores, boys manage to cash from relatives when birthdays and Christmas comes around.
Helping your child understand money
Peer pressure among kids usually starts when your child starts attending pre-primary and can have them begging or throwing tantrums to get stuff. Research shows that most impulse buying usually occurs in a physical store. With your credit card in tow and your kid by your side pleading “but John has one” you could start a never-ending spiral of impulse buying that could hurt your credit card. Keep in mind that the number of small purchases that you make eventually add up and can influence what you end up paying on your credit card bill.
Parents can use such moments of pleading to their advantage by letting their child know that it costs money to buy things. Understanding that they cannot get everything that they want is the first step. Introducing an allowance system is also a savvy way for them to understand the value of money. As they grow up they will know that they can’t have everything all the time. You could also open a savings account with them so that they begin to understand the importance of saving, which in turn can help you save on various expenses.
Monkey see Monkey do
As much as you might be astounded as to where your kid learns certain behaviour, both good and bad, the chances are that they most likely earned it from you. How you value, and handle money will be mimicked by your child. They might not take all of your money habits, but they are most likely going to keep a few. Impulse buying on your credit card can be a dangerous activity since it is not physical money that you are dealing with. According to RaboDirect, 81% of Australians made an impulse buy because it was a bargain. Women are most likely to purchase an item on impulse, but men are the ones that spend the most. It can easily accrue a large amount of debt and teach your child that impulse buying is ok to do when you have a credit card in tow. The places that Australians are most likely to make an impulse purchase with their cards is at the supermarket (38%) and clothing stores (29%).
Finding your way forward
One way to curve impulse buying is to leave your card at home and carrying cash instead when making small purchases. The same way in which you inform your child that they cannot have everything all the time can be applied to you. Just because you can afford it doesn’t mean you have to purchase it. Sleep on it instead before going out to purchase it. This could save you from entering a cycle of unnecessary debt that can be avoided. The most important thing that you can do is to create a budget and involve your child during the process. This will help them understand the difference between needs and wants, and also help you save in the process.