The next time you haul out your wallet to give your demanding child money for yet another thing they “have to have”, pause and reflect on the fact that one of the world’s richest children has a part-time job. 15-year old Brooklyn Beckham, worth about £210-million, works weekends at a West London coffee shop for £2.68 an hour. So, even though he could probably buy the coffee shop, his parents see value in him earning pocket money and learning to manage his finances on a smaller scale.
The way you deal with money is largely influenced by the way you were brought up. However, have you stopped to give thought to the implications this has when it comes to teaching your children about money?
These are our hot tips to help you teach your kids to be money-savvy:
Money is not a dirty wordYour children are going to take their cue from you and your behaviour will influence the way they deal with money for the rest of their life. Stop thinking about money as a “grown-up” topic that should not be discussed in front of children. This is an unhealthy attitude that encourages the belief that “money will come from somewhere”. You should start teaching kids about money from an early age. Talk to your children regularly about the value of money and let them hear you discussing financial issues with your spouse or partner.
Include kids in the budgeting processAsk any parent what one of their worst experiences is and without fail, they will tell you it is venturing into a shopping mall with their child. If you include your children in the monthly or annual budget discussions at home, you would be surprised at how quickly they grasp the concept of how much money you do or do not have available. A nice way to start this discussion is by including your child in the discussion you have with your spouse or partner at the beginning of the December holidays. You can talk about how much money you are setting aside for the holiday, what you want to spend it on and the activities you want to include.
Encourage them to saveTalking to your children constantly about saving is not enough. Just like any other person, they need to see the benefit of saving. Use different approaches based on what is age-appropriate. For example, let’s assume you have a five-year old who receives R10 a week for pocket money. If he has not spent any of his pocket money at the end of the month, he has saved R40 – give him an extra R20 as “interest” that he would not have earned if he had spent any of his money. The next time he thinks about spending his money, the thought of the “extra” money he will not earn will give him pause for thought.
Delayed gratificationIf you constantly make impulsive purchases, you are unconsciously teaching your child that it is okay to simply rush out and buy what you want when you want. Rather plan your purchases and discuss this with your children so that they learn to appreciate the concept of delayed gratification. They will thank you for this lesson in years to come.
Earning pocket moneyIf the idea of pocket money for no reason does not appeal to you, think about paying your children to do household chores. Again, these chores would have to be age-appropriate and could range from a seven-year old helping to unpack the dishwasher to your rambunctious teenager washing the car. Be careful about rewarding your child for things that they should be doing anyway, like making their bed!
The school tuck shopThis is an excellent start for kids learning the value of money, how to handle financial transactions and how to manage their money so that it does not run out. They will also quickly learn how much they can spend in a week. Don’t simply give them more money if their pocket money runs out. You don’t want to instil poor spending habits!
Remember that 50% of what your children learn from you is based on what they observe. So, it’s not enough to simply preach to them, you have to practise what you preach!