Helping your children understand the value of owning a home starts long before they reach adulthood. This guide will help you introduce key financial concepts early, especially the importance of saving and financial planning for future homeownership.
Why homeownership matters to children
In a world where the cost of living continues to rise, owning a home provides long-term security and stability. But beyond that, it significantly shapes how children feel and think about their environment and future:
- A sense of security and safety: Children often see the family home as their fortress — a safe space where they are protected and nurtured. [Read more about home safety]
- Emotional foundation: They form lasting memories and relationships tied to their living environment.
- Future aspirations: Childhood experiences in a stable home often influence how they want to live as adults.
- Practical benefits: Homes are designed with children's safety in mind, helping to prevent accidents and support healthy growth.
Instilling financial literacy from a young age
Children learn by watching — and their first teachers are their parents. The way you manage your money and property today sets the standard for how they will view homeownership later. If they grow up understanding savings and affordability, they’ll be better positioned to purchase their own home one day.
It's common for children to compare homes and ask questions like “Why don’t we have a swimming pool?” or “Why is my room smaller than my friend’s?” These are teachable moments that can open the door to valuable conversations about budgeting, priorities, and financial planning.
Start with the basics: savings and affordability
Before children can understand homeownership, they need to grasp how money works — especially saving. [Explore the happiness factor in saving]
One useful framework is the 20-10-70 rule:
- 20% goes to savings
- 10% is for giving (e.g., charity or helping others)
- 70% is for spending
This rule can also be adapted for adults to include debt repayment and investments.
Practical ways to teach children about saving
- Use a savings jar: Label a clear jar with a specific goal like “bike savings.” It’s visual, motivating, and easy to understand for children under five — but still useful for teens.
- Reward extra effort: Avoid paying for daily responsibilities, but do offer small rewards for unexpected help like gardening or helping with groceries. This teaches the connection between effort and earning, suitable from around age three.
- Open a youth bank account: Most South African banks offer child-friendly accounts. With parental consent, accounts can be opened for children as young as birth, though age 7–16 is more common for active engagement.
- Create a visual budget: Use crayons, magazine cut-outs, or free online budgeting tools to build an interactive budget plan. Kids aged five and up can grasp basic income vs. expense concepts with this approach.
- Explain credit: For teens, introduce concepts like credit scores, interest rates, and how to read a bank statement. These are foundational skills for building a healthy financial profile.
- Play educational games: Games like Monopoly and The Game of Life teach children about income, investments, and financial risk in a fun and engaging way.
- Set savings goals: Sit down with your child to set realistic savings targets. Teach them how to calculate timelines based on how much they save weekly — and explain inflation in simple terms when prices increase before they reach the target.
- Be a role model: Children mimic their parents. Let them see you budgeting, making trade-offs, and saving for long-term goals like home improvements or a family holiday.
Connecting savings to homeownership
Once your child understands saving, you can introduce the idea of a home as an asset — one that tends to increase in value over time. Use simple language to explain:
- What it means to own a home
- Why you need to budget for maintenance and improvements
- How much of your income is dedicated to homeownership
Use real examples from your household to explain budgeting and property-related expenses. Keep it age-appropriate, and check in to make sure they understand each concept before moving on.
For more on teaching kids about money, see: Four healthy money habits to teach your kids.
