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]]>Decisions such as purchasing goods, saving and investing can all be executed correctly if there is a sound financial literacy base.
The sooner one acquires these skills the better, so when better to start than when your kids are young. There are a different and appropriate terms and concepts to introduce to children at different ages.
“Sometimes parents are hesitant to talk about money to their kids because they feel that they’re not financial experts, their children are still too young to understand financial concepts or their children might make the same money mistakes as them. However, there are different basic concepts and practices that you can teach your kids at different ages that will equip them with the knowledge to make sound financial decisions in the future,” says Eunice Sibiya, head of FNB Consumer Education.
Children in this age group are too young to understand concepts such as finance, saving, budgeting etc, but there are opportunities to introduce basic financial concepts to little ones.
“Many of us have been out shopping, in a queue and waiting to pay and there’s a child wanting sweets or toys. This is a good time to introduce some basic money concepts,” adds Sibiya.
Children at this age can understand that you need money to buy things such as ice cream or clothes. So if you don’t have money, you can’t buy things. Another good tip is to explain to your little one that the only way to earn money is to work, and encourage them to think of ways to earn money, like helping with chores.
Sibiya says, “Explain the difference between “wants” and “needs”. While you’re shopping, point out needs such as soap, food or toilet paper, and describe “wants” as optional items like biscuits, sweets or chocolate.”
Children in this age group are more aware of money and excited to have it in hand. They might receive money as birthday presents or in the form of pocket money. It is in this age group where parents can teach them the principles of saving and money management. They could even have their own bank account, and manage it, to some extent, but only under the guidance of their parents.
At this age, children can make decisions with money, compare prices and learn how to save.
“Teaching children to save isn’t as hard as you might think. Children have an amazing ability to grasp concepts, especially when you turn a concept into a physical action like having a piggy bank. Taking a coin or two and dropping it into a piggy bank regularly, is the first step to educate your child on the importance of saving a portion of their money instead of spending it all,” says Sibiya.
Your child can now understand more complex concepts about finance.
“Teach your children that they need to save a portion of any money they get, whether it’s birthday money or money they received for doing chores around the house. When they reach their savings goal, they can be rewarded with accordingly. Show them how their money grows when they save, and think about matching your child’s savings to encourage them to save more,” says Sibiya.
By this stage, it is important for your child to have a firm understanding of how money works. It is in this age group that they would want to take ownership of their money and they would want to transact on their own. It is important to chat to your children about the responsibility of having money. Parental guidance is still needed to prepare your child to become a financially responsible individual.
“At this stage, introduce investment concepts and the importance of financial discipline. Children at this age should also be working according to a budget, and be able to manage it with guidance from parents,” says Sibiya.
Children at this age should be as financially independent as possible.
“If you’ve done your job correctly, your child will be able to manage their finances on a day-to-day basis, have a bank account and be able to use it responsibly, have a savings and use this for basic necessities, not you,” says Sibiya.
“Having a child is a life-long commitment, and avoiding the topic of money and financial management will only do your child and yourself a disservice. The best thing you can do for your child is to raise an independent and confident individual who is financially responsible,” concludes Sibiya.
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]]>Eunice Sibiya, Head of Consumer Education at FNB says, “It used to be that everyone worried about the cost of university, but nowadays you have to consider the costs of your child’s pre, primary and high school education. The reality is that you need to make decisions around your child’s schooling career as soon as possible, while you’re still pregnant. Once you’ve decided on the type of education you want your child to receive and where your child will be attending school, there are a number of financial plans and considerations to put into place.”
Firstly, you need to add this expense to your budget as soon as you possibly can, so that you can add a meaningful contribution toward your child’s education. It might be tough in the beginning to stretch your budget, but this will allow for adequate savings in the future.
“Depending on the child’s age, consider opening a savings account, or approach your bank or financial institution to ask about savings or investment plans specifically geared towards saving for an education. Many people do this for university tuition, but these savings plans can be for any level of your child’s education,” says Sibiya.
There are also a few things you can do while your child is at school to soften the blow to your pocket.
If you’re sending your child to pre-school or crèche, find out if your employer offers this facility on the premises. There are usually staff discounts and you won’t have to change your driving routine. You’ll also be close to your child during the day.
Throughout your child’s schooling career, find out what other expenses you’ll have to take care of besides tuition. You might need to buy sports gear or equipment. Extra-curricular activities might not be included in the tuition fee and will be an extra cost.
“Find out if your child’s school offers any sort of discount for early payment. It’s a good idea to use your bonus to pay for your child’s annual tuition, as you might get a discount if you do this,” says Sibiya.
She adds that, during enrolment, if you have two or more children at the same school, it might be worth asking if there are discounts for the second and third child. There might also be school or university bursaries on offer that could be relevant and slash costs.
Sibiya says another good tip is to consider buying your child’s school uniform from friends or school leavers to save money, or buy blazers, dresses a size bigger. Your child will grow into them and you won’t have to buy a new uniform every year.
“It’s very competitive out there and the rising cost of education means that you have to start planning as soon as possible so that you can lessen the effect it has on your finances in the future. The sooner parents start putting money aside, the longer their money can work for them,” concludes Sibiya.
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]]>However, even if you have budgeted carefully, as your child grows into a toddler, so do the financial responsibilities of being a parent.
Eunice Sibiya, head of Consumer Education at FNB says, “The first year of your baby’s life has certain cost implications, but between the ages of one and three, your toddler comes with their own unique set of costs. They are more social, attending birthday parties and might be going to a playschool or a childcare centre. The best thing you can do is be financially prepared for them.”
Many parents decide to enroll their toddlers in a childcare facility because their social skills are more established, and many agree that learning through play is beneficial for their development. Whether you decide on a crèche or playgroup, or both, Sibiya says that you should do your homework.
“You need to ask whether you and your toddler are getting value for your money,” says Sibiya. “Different facilities offer different services. Do you want a daycare, crèche or playgoup? Some crèches ask you to bring nappies and toiletries, while others include this in the cost. Decide on what you want and ask whether you and your toddler can have a trial run.”
If you’re choosing a childcare facility, let your child attend for a week, as a trial run. Also find out if your employer offers this facility. There are usually staff discounts and you won’t have to change your driving routine. You’ll also be close to your little one during the day.
Sibiya says that once you’ve decided on childcare or a playgroup, or both, you need to add this expense to your budget.
Sibiya also offers some tips, “Find out if your child’s school offers any sort of discount for early payment. It’s a good idea to use your bonus to pay for your child’s annual tuition, as you might get a discount if you do this.”
She adds that if you have two or more children at the same school, it might be worth asking if there are discounts for the second and third child.
Once your child starts interacting with other kids, they will be invited to birthday parties and chances are that you will be attending a birthday party almost every weekend. You will also have your own child’s birthday party to plan for.
“When attending other children’s birthday parties, try and find toys that work for both boys and girls like puzzles, play dough or bubbles. You could buy a variety of these toys in bulk, and even better if you buy them on special. Then bring them out whenever you have a party to go to,” says Sibiya.
This will give your budget a break in that you won’t be buying toys every month
“For your own child’s birthday, try to be cost conscious, hosting at home will save money and asking friends and family to help bake will go a long way.
“To be even more financially savvy, instead of asking for presents, ask close family and friends to pay small cash sums to an account that will go towards saving for your child’s education. You will be surprised at how quickly these small amounts add up over the years, and you will also be surprised at how relieved adults will be with this simple option,” says Sibiya.
Another cost to think about is that when your child goes to crèche or preschool, their immune system may be compromised due to being exposed to the outside work comes into contact with other children, they come into contact with germs.
Their immune systems might still be vulnerable, so bundle them up warmly in winter and if you want, there are immune boosting medications that you can make use of.
Sibiya says it would also be a good idea to double check what sort of medical aid plan you and your family are on. She suggests that you call your medical aid and perhaps re-evaluate your needs and the plan you’re on.
“As your child grows, their needs change and your budget needs to adjust accordingly. The best way to stay on top of this is to be financially responsible and re-evaluate your budget on a regular basis,” concludes Sibiya.
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]]>There will be more expenses to deal with and more pressure on a budget that will now have to accommodate three and not two people, but there is hope. There are a number of financial plans you can put into place before the baby arrives to ease the pressure on your bank account.
Eunice Sibiya, head of Consumer Education at FNB says, “Having a baby in today’s age requires careful financial planning. Everyone wants the best for their child, and first-time parents are very conscious about getting everything right whether it’s the pram they buy, or the school they send their children to. Of course everything won’t be perfect, but you can put financial plans in place before and after the baby is born to give your child the best start in life.”
A lot of financial preparation can be done before a baby arrives to ease the transition of a two-person household to that of three people. Ideally, it makes more financial sense to start saving as soon as you start planning to have a baby. Sibiya suggests the following:
Your current budget might not have a lot of wiggle room for extra expenses, so see where you can cut down. “Identify the luxuries and cut them out.. Pay off your credit card and clothing accounts and try and start your maternity leave with as little debt as possible,” says Sibiya
Now that you’ve freed up some room in your current budget, shop, shop, shop!
You can use the extra money while you’re pregnant to stock up on nappies, creams, wet wipes and anything else that is not perishable.
When the baby arrives, you might find it difficult to run out to the shops every day or two for supplies. Sibiya says that it’s also a good idea to stock up on non-perishable food, easy to cook meals and cleaning products while you’re expecting. And keep an eye out for sales and bargains!
There will be a few once-off and large expenses you’ll have to take care of before baby arrives, such as travel systems, sterilizers, cots, compactums, baby baths etc. These will set you back in the region of R10 000 to R15 000.
“The best thing you can do for yourself is to make lists and tackle a few items each month before the baby arrives so that the financial load isn’t too much. There are a number of websites, magazines and apps that will help you compile your lists. First time parents are sometimes skittish of looking at second hand baby goods, but if you have family or friends who want to offload a cot or pram, consider taking them up on their offer,” says Sibiya.
Go through all your loyalty programmes and rewards and “cash them in”. Use them before they expire and investigate how best to use them before and after baby arrives.
FNB’s eBucks rewards programme is rated the best loyalty programme in South Africa and is affiliated with a number of retail partners such as Dischem and Makro, where you can earn or spend eBucks when buying products for baby.
Contact your medical aid to make sure what they pay for and what not. Some medical aids have a baby programme that will help you with this. There will be a number of doctors visits, blood tests and scans. There are also a number of birthing options like natural versus C-Section, which carry different costs. Your medical aid will be able to confirm whether there will be co-payments that you are responsible for. It all depends what kind of plan you’re on and what rates your doctors charge.
Sibiya says, “You will also have to add the baby to your medical aid as soon as he or she is born and evaluate your current plan. Some plans are better than others when you have dependents, so do your homework.”
“Most importantly, know whether you will be on paid or unpaid maternity leave. When you inform your employer of your pregnancy, make sure you’re well versed on their maternity policy. Understand what your income will be and plan accordingly,” says Sibiya.
If you’re going to be on unpaid maternity leave, you’re entitled to UIF benefits.* Sibiya says it’s important to start the UIF process as early as possible, whether you tackle the process yourself or decide to make use of an agency.
“There are a number of forms that you’ll need to complete, and your plate will be quite full preparing for the baby, so do what you can before the baby arrives,” she says.
If you’re sending your child to a crèche or hiring a nanny to help out when the baby arrives, do your homework. Some employers have on-site crèches that offer discounts to employees. You’ll have the advantage of not having to drive out of the way to drop your little one off and you’ll have him or her close by if you want to visit during the day.
“Deciding to have a child is one of the biggest life decisions you can make, and the costs start way before baby arrives. The best thing you can do is plan ahead and be prepared,” concludes Sibiya.
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