We’ve all heard stories about children who go off to university – armed with only a student loan, an overdraft facility and perhaps a credit card – and run up mountains of debt in the first few months. Make sure that doesn’t happen to your offspring by teaching them the true value of money, well before they leave home.
1. TEACH THEM TO SET GOALS AND SAVE FOR THEM
Label a jar with a set amount of money to be used for something specific. Start small – for example enough to buy some Lego or paints. Collect enough change in the jar and count it out before buying the treat. Keep the money separate when you go to the shop, so your child can pay for the item, using the cash.
2. DIFFERENTIATE BETWEEN ‘WANT’ AND ‘NEED’
She needs trainers, but she wants the coolest brand. You need food, but you want to eat out. Apply this rule to anything you buy and to any of their requests for ‘stuff’.
3. GIVE TO OTHERS
Next to the treat jar, keep another, labelled ‘for charity’. Get younger children to put in a few cents a week from their pocket money and teenagers to donate some of their allowance or earnings. They need to see you giving to others, too – whether it’s a standing order to a local nursing home or volunteering your time for a charitable cause.
4. TEACH THEM TO MANAGE MONEY
Many banks offer plans, especially for adolescents and young adults, aimed at instilling a responsible approach from an early age and teaching various aspects of personal finance – from saving to investing in the share market. Go online and start searching for interactive sites.
5. MAKE CHOICES, NOT SACRIFICES
Instead of saying, ‘we can’t afford that’, ‘that’s too expensive’ or just ‘no’, use a phrase that expresses a deliberate choice. Try ‘I’d rather stay at home this year and have some fun days out so we can save for a special holiday next year’; or ‘I prefer to bring your juice and my Thermos of coffee with me rather than buying them at the cafe, so we can keep that money for more importantthings’. That way, instead of feeling that ‘no’ means sacrifice, scarcity or embarrassment, children learn that life is about making choices.
6. HELP THEM TO UNDERSTAND ADVERTISING
Explain that ‘only $99.98’ is a marketing trick. Analyse ads on the TV and radio and see if your children can work out for themselves how advertisers push their products.
7. SHOW THEM THAT YOU PAY MONEY IN AS WELL AS TAKING IT OUT OF THE BANK
If all your children ever see is you withdrawing large notes from the ATM, they’ll grow up thinking that machines dole out money. Make sure they also see you depositing funds.
8. SHOW THEM YOU’RE PLANNING FOR THE FUTURE
As well as using a moneybox to save for treats, make sure your children hear you talking about paying bills on time, saving for a new fence, paying off the car loan or investing for their university education.