Your kids watch every move you make – even with money! So teach them the RIGHT way to manage their money and lead
by example. After all, it’s pretty hard to teach your kids about money and finance when you’re struggling with
the concepts yourself.
So get on top of your own finances [read the “Money Basics” tab on the NavBar
for more information] and use this success to show your children how it’s done. And then teach them about money and
finance – debt (good and bad), savings, investments, assets.
The skills you need as an adult to manage your
finances are the skills you should be teaching your children today!
And they are never too young to learn. I recall
a discussion with my 4 year old about why I needed to go to work – to earn money to buy food, toys of course, fuel for
the car and so on. And I was stunned when he said, “You don’t need money - just use a credit card”. Where
did he learn this? From watching mummy and daddy use credit cards for all our purchases (for convenience mainly). We always
pay off our card from month to month – but our kids don’t see that.
It was much easier when I was
a child because dad brought home a pay packet with real money in it and shopping was done with this cash – so the whole
concept of money in and money out was much easier to visualise.
But it doesn’t mean that we can’t
teach our kids this fundamental concept of money – it just needs to be taught differently. So try the following:
with cash from time to time so they can see that money is a physical thing – not a seemingly bottomless pit on your
credit card. This also helps them understand the concept of budgeting while shopping – you can’t get what you
can’t afford, but you can prioritise what you buy.
- Talk about the buying process. Show them how to compare prices
to get the best value for money and explain that by doing so, you have more money left to save or spend on other items.
them your credit card statement (if you’re game!) and explain that whenever you use your credit card for a purchases,
it will turn up on the statement. You may even be able to point out a few examples of purchases made for them. The important
thing to stress at this point is that the total of the statement now needs to be paid from your pay packet – so credit
cards really are a real cost.
- Keep your financial records in order and discuss the family budget and finances openly
with your kids so they see responsible financial management in action. Explain to them where the family income comes from
and what the family expenses are including mortgage repayments/ rent, loan repayments, vehicle costs, living costs, investments/
savings and insurances.
- Because kids these days are highly computer literate, get them involved early with budgeting
software - it combines their love of the IT world with the vital skill of personal financial management. Try MoneyTree Personal Budgeting Software - it is easy to use, and probably the best value budgeting software available.
- Help them open a bank account for
saving their money and teach them how to prioritise their spending – must have, should have, nice to have. They will
quickly learn that they can only get what they can afford!
- Other than the necessities of life parents need to provide
for their kids, make your children responsible for their own purchases so they learn the value of money and how to set savings
- Whatever you do, DON’T give your kids a credit card or access to programs where they can accumulate
huge debt without realising, such as unlimited mobile phone accounts – well, not until they are ready and educated about
HOW to use credit facilities wisely.
But the key is to just talk to your kids about money so that they know it is
a normal part of life and that money management is just another lesson they need to know.
And also remember that
developing good habits such as money management takes time – talk to them regularly and honestly about money and finance.
So lead by example and take the mystery out of it to help your children understand money and finance – if
you do, you will be setting them up for a life of financial security and freedom.
And check out the pocket money forms and saving plans in the ToolBOX
to give you some guidance.