4 July 2024
Honest money conversations are critical to instil foundational financial literacy. More than that, they can bring families closer together and normalise ‘money talk’ early on. The bottom-line? This Youth Month, it’s time to talk about Project F – finances.
Mariska Oosthuizen, Chief Marketing Officer at Sanlam says, “Speaking about finances makes money less intimidating and gets kids familiarised with foundational concepts from the get-go. This is exactly what Sanlam’s Project F campaign aims to achieve. We want to get people speaking about money more. This is directly linked to improved mental health, better financial decision-making, and improved outcomes.
Mariska Oosthuizen, Chief Marketing Officer at Sanlam
“Parents often wait until kids are older to start speaking about money. However, Cambridge University behavioural researchers revealed children start learning about money from as early as three, with most of their money attitudes formed by seven. So, it’s hugely advantageous to weave age-appropriate money-talk into your everyday parenting early on. Sharing with kids also makes them feel respected and included. It allows you to model and vocalise the behaviours that could set the course for their mental ‘money’ scripts and formative money memories.”
Here, Oosthuizen shares 5 critical money conversations to consider having with your kids:
Why It’s Crucial: Understanding the value of money is the foundation of financial literacy. Teaching children that money is earned through work helps them appreciate its worth. Explain different ways people earn money, whether through traditional jobs, entrepreneurship, or investing. Discussing your own work and how it translates to money can make this concept more tangible.
How to Discuss: Use real-life examples to explain your job and what you do to earn money. Use play to model key concepts. For example, set up a pretend shop and let your little one ‘sell’ you their toys for R1, R2 or 50c to familiarise them with coins and the idea of exchange. Later, start to introduce chores – like keeping a room clean – for small sums, to instil the understanding that money is earned through effort.
Why It’s Crucial: Mac Gardner, financial planner and author of ‘The Four Money Bears’, believes one of the earliest and most fundamental behavioural patterns kids pick up from their parents is spending habits. Our observations are our first teachers. Children see their parents spend money but don’t always observe what’s happening behind the scenes – hard work, saving, investing, and giving back. It’s crucial to vocalise these behaviours and practice them together.
How to Discuss: Introduce the concept of a simple budget, dividing a child’s allowance into ‘spending, saving, and giving’. Use jars to visually represent these categories. Encourage them to set short-term and long-term savings goals, such as saving for a toy or a special outing. Share what kinds of causes you support and give your child some options of charities they could save for as well. Then talk through some of the things you spend your money on and why. Gently, keep bringing it back to the fact that you work hard for the money you spend.
Why It’s Crucial: Distinguishing between needs and wants helps children prioritise their spending and understand that they cannot have everything they desire. This lesson is crucial in developing wise spending habits and avoiding impulsive purchases.
How to Discuss: When shopping, involve your children in making decisions by asking them whether an item is a need or a want. Discuss why certain purchases are necessary and others are optional.
Why It’s Crucial: Familiarity with banking concepts and the role of interest helps children understand how money can grow over time and the benefits of saving and investing. This knowledge is essential for them to navigate financial systems effectively in the future.
How to Discuss: Open a savings account for your child and show them how deposits work. Explain how interest accrues on savings and why it’s beneficial to keep money in a bank. Use simple, age-appropriate language to make these concepts clear. For an older child, try drawing a piggy bank with R10 inside it. Draw a R1 coin next to it. Then draw R11 inside the piggy bank. Now draw R1.10 next to that. This shows them how money grows each year it’s invested.
Why It’s Crucial: Understanding debt and credit is vital for making informed financial decisions. Teaching children about the consequences of borrowing money and the importance of maintaining good credit can prevent future financial pitfalls.
How to Discuss: Explain how credit cards work, the concept of borrowing money, and the responsibility of paying it back with interest. Offer your child the opportunity to borrow R5 for the shops, if they promise to pay you back later that day, plus an extra R1 in interest. Let them know that if they don’t pay you back on time, they’ll have to pay you an extra R2.
Oosthuizen adds that money talk should ideally be part of your day-to-day chats. “Every time you’re in the shop, ask your kids to compare products not just by price but also size, for example. Set shared family savings goals to work towards, like a holiday. Having these essential money conversations with your kids and being open about finances from a young age is crucial to normalise discussions about money and instil strong foundational finance lessons early on. This proactive approach sets the stage for a lifetime of financial confidence.
“Sanlam is committed to empowering more South Africans to talk about the ‘F word’ through our Project F initiative. For frameworks and tips for these critical conversations, visit the Sanlam website. Finances is not a dirty word. Let’s start talking about it, South Africa.”
