Five tips to help your children develop money skills that will set them up for life
As a parent, you want the best for our children. While you may want them to have the latest toys or coolest gadgets, this will not set them up for financial success later in life. You want them to be secure and for this, you need to lay a foundation that teaches them how to manage their money.
“Good manners will open doors that the best education cannot but good money habits will give your children the knowledge they need to build wealth,” says Colin Long, Director of the Consolidated Group. “Parents often rely on their children’s teachers to teach financial literacy but this has to come from us as parents. Your children learn by modelling their behaviour on what you do, so you need to be open and honest about finances and teach them skills that will help them to become money savvy.”
Colin says that the earlier you start your child’s financial education, the better and his top five habits that will help them become financial superheroes are:
1. Delayed gratification
Successful people are those who can delay gratification. In its simplest form, this can be described as the ability to wait 15 minutes to get two marshmallows instead of one. It’s all about self-control and speaks to the ability to delay the impulse for an immediate reward to receive a better reward in the future. To teach your kids about delayed gratification, use pocket money to help them understand saving money, that the later reward is generally much larger than the immediate one and that’s why its worth the wait.
2. The value of money
It’s not always easy to take your children grocery shopping as they sneak things into your trolley when your back is turned. When this happens, put these “extra” items to one side and explain to them that they were not on your shopping list and that you haven’t budgeted for them. Show your kids the receipts with the amount that you have paid. This will teach them the value of money, of planning and delivering on a plan. The important thing is to weave money lessons into everyday life.
3. Create opportunities to earn money
Children need to have money of their own so they can learn how to make decisions about using it. Instead of giving them pocket money, consider setting them chores so they earn it. This will teach them that if they want to get paid, they have to complete certain tasks. If they go over and above these tasks – like offering to wash your car – then they will earn additional money. This will develop creativity and ingenuity, and teach them that if they are prepared to do extra work, they can increase their earnings.
4. Instill a habit of saving
It’s important to teach your children from a young age that money isn’t just for spending, it’s for saving too. Saving teaches goal-setting and planning and it also builds security and independence. Help your children get into the habit of saving by giving them a glass jar for their coins so they can watch this grow. As they get older and advance to real banking, open a savings account for them and let them manage their money using a financial App. This will introduce financial technology at an early age and help them practice good money habits.
5. Use positive language
Talking to your kids about money is a central element for their financial education but resist the urge to talk negatively. Just as you tell your children to be honest, it’s important to talk openly and positively about your money values. This can reduce the negativity that often surrounds finances and teach them that money provides options and opportunities.
Colin concludes by saying that money shouldn’t be a taboo subject that grown-ups never talk about in front of kids. Rather, let’s pass on financial wisdom and advice as we can, in age-appropriate ways so they can learn these essential skills and have lots of fun on their journey to becoming money savvy.