Updated: Oct 1, 2018
Have you ever told your kids “It’s time for you to learn how to save money.” “Don’t spend too much of your allowance! You should have saved it” Or even bought them a piggy bank or perhaps gave them a savings bond instead of a toy as a present?
The real question is how did they react to it? Are they happy? Probably not!
This is where learning about money comes in, a child is not going to necessarily understand that concept! Delaying instant gratification for a particular item now for something even better in the future….
So how do we actually teach them about money and the concept of saving in our ordinary days? Here are just a few tips that work!
Changing your Money Mindset This is easy but only if you have already mastered the trick of changing from one mindset to another – almost instantly like a flip of a switch. You must apply this first to yourself. If you have negative feelings or insecurities about money, change it! Avoid using phrases like “we don’t have any money” and “we’re broke”.
Instead, say things like “We can afford it later, but not now” or “We have other priorities right now”. Show them how to prioritise their wants vs needs. Explain to them that you have other more important expenses.
Prioritising quality time and experiences rather than material things All of us have those moments when we want to give our kids everything just to see them happy. Unfortunately, that is not the way it should be.
Don’t get us wrong – we’re not telling you how to be a parent. But we also need to infuse discipline especially in the financial aspects of a family. Make them understand that there are financial constraints and though you have enough in the kitty now, it may not always be the case in the long term.
Instead of splurging on toys, invest in experiences, memories & unforgettable quality time with them. These may be free but they have a more long-lasting effect on your child’s holistic growth, rather than material stuff. Don’t spoil them with things; spoil them with love and attention.
Be real and positive Be real in terms of your financial status. Don’t lie to your kids or pretend that you have more money than you actually have. If your financial ship is sinking, take a deep breath and open this situation up to your kids. You will be amazed at how much imagination they have. Who knows – your kids may have a million dollar idea just sitting behind their thoughts!
Family budget meetings
Involve your kids in the family budget meetings. Allow them to know what it takes to run the household and that the money for clothes, trips out to eat and holidays don’t grow on trees. Include them in discussions on how you intend to plan and save for your next family trip or even for a big purchase. Let them understand what it takes for Mum and Dad to provide them with the life they are now living.
Help them with creating their own budget Do you give your children an allowance or have they experienced having a part-time job where they earn money? If so, help them create a budget so they can manage their income or allowance more effectively. You can also give them additional ways to earn money by doing extra household chores or doing quick errands.
Encourage them to earn, save and invest money so they can afford their ‘wants’. You will be surprised at how much effort they are willing to put in to finally get that video game, that expensive dress or even that high-end laptop.
Create an investment account for your kids Most of the adults have now saved or thought of saving for their own retirement. Why not encourage your kids to do it as well? The earlier, the better.
Open up a guardian or custodial investment for your kids. You can put away as little as $5 to $10 a week in the account and have it grow passively over time. This will be a great head start for them in investing and growing assets.
Make them understand what debt is
Everybody has or had debts. No matter how big or small it is, we all have experienced borrowing money. But not all debts are bad. Ex: debts that you have acquired to invest in another asset that will bring you more money in the long run.
Help them understand the importance of racking up high debt before they graduate or not buying things on credit. Share to them your experiences with debt and the importance of having a good credit rating.
As parents, it is our main duty to prepare our kids to be independent adults in the real world by giving them guidance and the right tools on how to earn and manage their money.
It is never too early or it’s never too late to teach kids about money and instill in them good financial habits. Support them, guide them and give them a head start.
Let us help you so that you can also teach your kids too! Contact us for a 30-minute free consultation today.