An allowance is the first platform where your child experiences having money and choosing how they spend it. It can also be an opportune time to instil good money habits that will come in handy when they are older. Here are six handy tips to help you teach your child financial literacy through their allowance.

Knowing needs from wants

Teach your child(ren) the basics of distinguishing needs from wants. Depending on their age, you can use your own budget as an example of how you separate needs and wants. Give them the power to decide how they want to separate their pocket money to cover their needs and wants.

Set a savings goals together

Saving money is an opportunity to learn delayed gratification and how to set realistic financial goals to reach your target. It is also one of the foundations anyone needs when it comes to financial literacy. Show your child the importance of saving through their allowance by asking them what items they wish to have. For example, you can set a goal to purchase clothes, shoes, tech gadgets or for a trip. Planning together on how long it will take for them to reach their goal will also make it more practical for them.

Let them make mistakes

Financial education is a learning curve. As you figure out what is the appropriate amount you should give them as an allowance and how to be consistent, it will also be a time of learning for them. Allow them to make mistakes. As their money personality develops the more you will be able to tailor their financial education to meet their needs. 

Take them shopping with you

Children aged 9 - 12 years or older can benefit from going shopping with you. Use the moment in-store to show them the benefit of comparing prices and finding good quality items. You will need to break this down according to their attention span to share valuable information. Let them assist you in choosing items and ask for their feedback on why they have made certain choices.

Use tasks to help them earn more

Set tasks around the house that they can do to help boost their allowance. Learning to earn money can help your child understand the value of money. If they have an idea that they want to turn into a business that can help them make money, aim to support them. It may be tempting to bail them out when things are not going according to plan, but keep in mind that they need to make mistakes and learn from their mistakes.

Lead by example

Financial lessons are best learnt from practical examples rather than what is said. You are their first example of how money is handled. Therefore, learning financial literacy to improve your financial habits and sharing these through practical tips to help you and your loved ones grow financially is one of the best things you could do. Start by learning how you can protect your legacy with financial planning and more from our Finance & Wills segment to get you started.