Dear Parents Series

Dear Parents…About your Child’s Finances

Teach your children to work for money. Show them how it doesn’t really grow on trees! But allow them to make a few mistakes, from time to time.

You might be reading this and thinking, well I only have two kids. My super’s intact and I have my investments. They’re kids. Plenty of time to teach them.

Now that may well be the case. You might be money-savvy. You might have your eye on the proverbial investment ball, but if your kids don’t develop that money-savvy habit that you have, bet your bottom dollar they will find themselves in some financial ditch…not necessarily of their own making, but a ditch nonetheless, simply because they don’t have the skills to escape the ditch.

So how do you make them financially aware?

By teaching them to manage their own money.

Yes that is difficult in this era, because money neither looks, nor feels as it used to. In fact we’ve kind of broken up with money during the lock down. It’s in the divorce basket. Even the hole in the wall has fallen out of favor.

But there is a way

In this article I talked about some friends of mine who taught their two young girls the value of money, by exposing them to the visuals of actual cash, and by showing them how spending, and saving, works.

They were very young at the time, and were given jobs to do, like making their beds, feeding the dog, picking up poo, completing their homework, and setting the table for dinner.

Bear in mind they were paid only if they did the jobs well! That in itself raised the bar in the efficacy of their work. These girls were at work!

And then, at the end of the week, (oh the excitement!) their father became the Chancellor of the Exchequer, an elevated position he assumed, where money earned was doled out, tallied up, by him, and cross-checked with the children.

Can you imagine the thunderclap of silence as he and the children concentrated on this all-encompassing task?

Can you feel the tension in the air?

That in itself was a great thing. This was all about life. About the reality of how the chancellor viewed your work. One needed nerves of steel to even participate, especially in the first few weeks.

Seeing that, if you didn’t do a job well meant you didn’t get paid, was a little gut-wrenching! RELAX! That didn’t happen often!

Once. the two children had their money in front of them, it was then divided into three lots:

• one third for spending
• one third for banking
• one third for people in need

The children were able to feel the actual money before it was put into containers, except for the money for saving, which the parents then took care of.

This was a huge learning curve for these two girls. How to make money and whether or not to spend it, is a conundrum, and it’s only in wading through the mire that children reach a conclusion that works for them.

Some children will naturally be savers. And from experience, some will be spenders. There’s certainly a life lesson, no matter which way you look at things.

Twisting a child’s arm will not teach a child to swing either way.

BUT, experience will.

The biggest lesson for these girls was that once you spend your money, even when you are allowed to, it’s gone. It never comes back. And when you realize this it cuts deeply, however young you are.

That was a lesson the elder child learned very quickly when she saw that her free-to-spend graph had plateaued because of her habits.

These children, still in primary school, aged ten and seven, are these days very much financially aware.

‘Do not teach your child to save money. Educate the child on how to earn it. So when the child starts spending, will know the value of money and the happiness in the process.’

A friend of mine with two children failed to teach his children about money. But money was always available when the kids needed it. They were given deposits for their first home.

The primary message this sent to the children was that money flowed like a river.

The secondary lesson was that their dad was an easy repository of cash.

Except that, their dad’s business failed and the cash was no more. The supply dried up overnight.

Now there was an even bigger learning curve. These two kids, now adults are reading madly about investing.

They budget like there’s no tomorrow.

And already their own children are also learning that money has to be earned, that it really doesn’t grow on trees.

Each is very careful about how they discuss money around their children. As you might guess, it’s always in a positive, yet measured light.

They show their children where money earned, goes, when they are doing their monthly budget.

Normalize how you discuss and talk about money

‘The more we ignore something, the bigger problem it becomes. If money isn’t talked about in the household, our kids won’t be equipped to handle the challenges later in life when they have more to spend, or less. A great place to start is around the dinner table, where we talk naturally about days at school, sport, friends. So talking about money should be just another topic of conversation, like what chores they could do to save up for that special toy; or how dropping down to just one takeaway meal a month will help us take that big family holiday. Involve them in these money conversations so they can be active in these decisions and feel good about saving and spending money’.

And like my friend’s daughters, they are taught to earn, and manage their incomes.

It’s never too early to teach your children the vagaries of money and its management.

It’s never too early to expect your children to work for their money. Work can be something as simple as putting their toys neatly away.

But at the end of the day, the most important aspect of money is being generous with it. Wanting to help someone who is down on their luck, is surely one of the most character-building of all emotions.

‘Teaching kids about money is never just about money.’