Most parents want to teach their children good manners and how to be the best they can be. But as we prepare them to go out into the big wide world, how much time and thought do we actually put into teaching them to be good with money?
The reason we need to think about this is because the relationship and behaviour they develop with money can have impact on their future dreams and aspirations. And let’s face it – behaving responsibly with money does open you up to more opportunities and life choices.
So what exactly should we be doing to strike the right balance in teaching our children about the role of money – and how to eventually manage their own?
The first thing to remember is that children learn from role models, particularly their parents and teachers. Therefore a role model’s attitude to money, saving, budgeting and spending is likely to significantly influence them – either consciously or subconsciously. So the buck very much does stop with you.
But it’s also wise to remember that children must learn the value of working toward something – and not simply expect to be handed something on a plate. Because on the flipside it is possible for parents who scrimp and save in an effort to give their children the ‘best’ – to end up raising children who don’t know the value of a dollar.
So what you want to do is avoid raising children who become part of a ‘Give me’ Generation.
Apart from having positive role models, individual personality traits and sociological factors can also play a part in whether a child will grow up to be good with their money. Therefore if you can ensure you have positive influences around your children, it may not always turn a child into the world’s best saver - but it can make a real difference and help balance out any natural spendthrift inclinations.
Some key things to take into consideration when teaching children about money are:
- Ensure they understand the different ways in which money is made. For young children, this is a relatively simple concept of work equalling money, but as they get to an age when they can commence paid employment, encourage them to have a part time job to allow them to find their feet with money and understand the independence it can provide. Having a job also teaches them about loyalty and commitment and allows them to take their first steps into the business world.
- As they go through life, reinforce the links between education, career, earning capacity and lifestyle so that they can place more value on why education and training is so important. Rather than simply telling them that money doesn’t grow on trees – let them understand how and where it can grow.
- Learning about money should be fun. If it’s too dull they’ll lose interest quickly. Games such as Monopoly will always have their place, as do games you can play where they don’t realise they’re learning because you make it part of your routine.
- It should be rewarding. Look to your child’s age and personality to give you an idea as to how long they can save money and show responsibility in this area, before they lose interest if there isn’t some sort of reward (such as actually buying something they want). This is where the most obvious issue of pocket money comes into play – and the main lesson is to ensure they earn their money and plan what they can do with that money in terms of spending, saving etc.
- It’s almost never too early for children to learn to be socially responsible with their money. Teach them to give a part of their savings to those in need, or perhaps for something good for the whole family - which will also help them to accept the necessity of paying taxes in later life.
- Give them examples of unwise expenditure of money. Kids love a good story.
- Involve them in your financial decisions. Why do you hunt down specials? How much money is needed to pay car registration? How much do you earn and what comes out of it? Ensure they are aware that once they’ve made a choice of what they spend their money on – that money is gone.
Children of today are entering a whole different world of finances compared to previous generations. Materialism is stronger, credit is easily available and the impact of mobile phone and internet use has opened up a new age of temptations.
And frighteningly for some, it is likely that many children growing up today will find it difficult to be able to afford to buy their own home in the same way their parents did.
But if we can arm them early with the right attitude to know that they can eventually work towards getting what they want, the journey together will have been worth it.
And… they can always be reminded of the wise words from philosohper, Ayn Rand: