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Heritage Month is celebrated annually throughout September, providing a sense of identity and belonging. One of the most valuable gifts that you can pass on to your children is teaching them to handle money wisely. This helps to establish sound values and gives them a sense of confidence and control around a subject that’s often fraught with emotion and worry.

From a very early age, children can start learning about the value of money, basic budgeting, and saving towards a goal rather than blowing pocket money on the latest trend. This is particularly valuable given peer pressure and personalised advertising on social media.

What are the lessons you should be passing on to your children?

* Decide between needs and wants. An early lesson is helping children to differentiate between what they’d like to have and what they really need. We’ve all seen “pester power” at work in a till queue with kids demanding sweets and other goodies laid out to tempt them. Rather than say you’re not buying them something “because we can’t afford it”, explain that you’re choosing to spend your hard-earned cash in another way. For example, “I’m saving money so we can go and visit granny and grandpa in the school holidays.”

* Understand the value of money. Using coins, notes and calculators in games is a good way to teach children about the value of money, and to pass on maths concepts such as addition, subtraction, multiplication and division. There are many suitable board games, or you can make them up. You can show them colourful “deals of the week” ad flyers, and ask them to help you compare prices in the supermarket or on an app.

* Handle money well. Pocket money is an important step in teaching children financial responsibility. Initially, pay children pocket money once a week. As they get older, you can make this once a fortnight and later once a month. This will teach them to make it last.

* Money is earned. Children should learn that money is earned, not given. They can earn pocket money for doing household chores such as making their bed, feeding the family pet or washing up.

* Learn to save. You can encourage younger children to put away some of their pocket money in a piggy bank each week. As they get older, open a bank account and suggest they try to save some pocket money and any additional income they receive, such as birthday money or income from part-time jobs. If they want to buy a big-ticket item such as a music gadget or surfboard, explain how they will need to save for it, possibly sacrificing other want-to-haves. You could match the money they earn or save, or teach them how to manage debt by paying back the cost in instalments.

* Keep a record. Help children to keep track of income and spending in a book or on a spreadsheet. When you pay pocket money, look at the previous month and explain what they did well, or how they might have spent or saved their money better.

* Learn from lessons. The biggest lesson they’ll learn is when they splurge on something and later realise that it was a waste of money. Don’t bail them out. Let them make their own plan to supplement their income by doing more chores or getting a part-time job.

Sarah Nicholson is the commercial manager at personal finance website Justmoney.

PERSONAL FINANCE