Teaching your children to be smart with money gives them a vital life skill that many of their contemporaries have missed out on. In this article money coach and financial counsellor, RAEWYN BLOMFIELD provides some helpful tips on developing financially savvy kids.
Whether taught to them, or learnt by observation, by the time they leave home, young people have developed attitudes, values and skills around money which they will carry with them for the rest of their lives.
These attitudes, values and skills may propel your child to financial independence, or leave your child stuck in a ground hog day situation of constantly repeating bad habits and getting the same negative results.
MoneySmart sums it up
“As a parent, you have the power to shape your child’s relationship with money. Start early by showing them where money comes from, how to budget, how to navigate credit options, how to spend wisely and how to set savings goals.”
All parenting starts with the parent. What attitudes, values and skills are you unconsciously modelling to your children right now?
What values are you trying to teach your children around money?
Do you discuss money with your children and give them age-appropriate information about where money is spent in your household and how money decisions are made?
If you explicitly teach saving for a goal – such as saving for a toy out of pocket money, then buy a large item clearly on impulse, will your children model themselves on your words or your actions?
What lessons do you want to teach them?
Work out what money values are important in your household, which you want to promote to your children. Some examples are:
- Is it’ plan before you spend’ so money is not wasted? Part of demonstrating your sustainability ethic – a use resources wisely ethic?
- Perhaps the importance of giving to others, and planning your spending so money is available for it? This is one facet of showing kindness and consideration for others.
- Maybe the importance of communication and of working together within the family, so family financial goals are reached.
Money is not an adult secret
- If you take the children grocery shopping, discuss why you are buying one item over another, and get them involved in making choices.
- Discuss your family financial goals. For example the annual family holiday and how money is saved each payday so it can be afforded.
- Your children see what other children get and come home asking for similar. It’s hard to say no, or nor yet. If children have a greater understanding about how much money is available in the household, and if they feel listened to, they are much more likely to be reasonable in what they ask for.
There is never enough money for everything you want right now
There are two ways this is shown:
- You’ll have to wait. The concept of delayed gratification is a hard pill for a child to swallow. Learning that you may have to wait for something you want takes discipline no matter what age you are, and frankly, some people never learn it. In my experience, this lesson is only learnt if the parent delivers on the promise to some degree, at some stage. If the child believes s/he is being fobbed off, the lesson learnt may not be the one the parent intended.
- Is it a need or a want? To a child, every want is a need. They absolutely MUST have that gadget, or they can never show their face at school again. Show them that every monetary action has a consequence. What are the consequences to the family budget if the item is bought? The money has to come from somewhere. Do they want the whole family to eat baked beans for a week so it can be afforded?
The thorny issue of pocket money
The subject every parent has an opinion on. Why do you want to give your child pocket money? It can be:
- To teach children to save for a desired toy – i.e. goal setting and delayed gratification.
- To allow the child the freedom to spend a little money as they want.
- To teach the habit of saving a portion of income every time you get it.
Whatever the purpose is, the child should understand clearly the reason they are getting the pocket money, and how it is to be used.
Hopefully these tips have given you ideas on how you can assist your children to develop their financial literacy skills.
Money coach and financial counsellor, Raewyn Blomfield, is the principal of Money Health Money Wealth. Raewyn helps people to manage their money and take control of their spending and debt so they can achieve their financial dreams. If you would like to find out more about her services you can contact Raewyn by calling her on 0468 317 259 or simply send her an email.
General Advice Warning: This blog is not designed to replace professional advice. It has been prepared without taking into account your objectives, financial situation or needs. You should consider the appropriateness of the advice, in light of your own objectives, financial situation or needs before making any decision as to what is appropriate for you.