Our kids are accomplished consumers, bombarded by advertising, and it’s easy to learn how to spendmoney. Sadly there isn’t a culture of financial education in schools, which leads to an ignorance of financial planning that is anything but bliss for many young adults as reality kicks in. Action at home is required.
First, rewind and consider what YOU wish you had known when you were younger. Were you warned that debt can hurt? Did anyone encourage you to save for the things you want to buy? As they are far more impressionable when they’re young, tackling this part of your children’s training should start early. By the time they’re typical teenagers your messages may fall on earphones, but as they mature they need to navigate through peer pressures and rationalise what good value looks like.
The Child Cash Course
1. Instil that careful budgeting is necessary – pocket money can be spent freely but when it’s gone, it’s gone.
2. Establish the difference between ‘needs’ and ‘wants’.
3. Let them learn from mistakes with their money early in life
4. Agree with tots and teens the amount of savings from birthday and Christmas money to be used towards bigger items.
5. Open a child bank account as soon as the child can understand the principles and progress through the account offerings at older ages
6. Explain how credit and debit interest works and the potential perils of APR (You may need to brush up yourself first!)
7. Explain how money is earned; as they get older consider payment for jobs around the house to reward effort.
8. Teach them the art of negotiation
9. Show them a credit card transaction and when the statement arrives, highlight the item and explain how it will be cleared from REAL money.
10. Be very clear that “The Bank of Mum & Dad” closes at some point………
We need to make kids financially aware. Ultimately our relationship with money and how we use our resources is key to achieving financial stability throughout life.