By Jodie Nolan MBus (AppFin)
All parents really want their children to grow up with the very best education, be street wise where possible and extremely savvy when it comes to matters of ‘life’. Part of that desire to see them successful is the want for them to excel financially. Experts believe that financial education starts early, generally in your home, but what if you are like many parents who struggle’s personally when it comes to money management skills?
Being a parent these days can feel overwhelming. There is huge responsibility and much guilt associated with not spending enough ‘quality time’ with them, trying to find the right ‘work/life balance’ and providing a great head start for your child. Add to this the stress of teaching them to eat well, have good manners, be studious, courteous and always active, we run the risk of wearing ourselves out! Being a busy, working mother of two small children myself, I am all too aware of the consequences of trying to be ‘superwoman’, but am a firm believer in being able to have it all, we just need to learn how to prioritise.
Some parents believe that their children have no business or right to know about the family financial situation, other parents believe their children are too young to understand or care about financial matters so avoid the financial talk altogether. With this in mind, what hope do our children have to learn more about money? Do we leave this important topic to the school curriculum? Most experts will tell you that you can’t rely on our schooling system to teach your kids about money and finance, and I agree! In my opinion, teaching your children crucial money skills not only equips them well financially for their future, but provides a skill that assists with all aspects of their decision making, responsibility and reward for effort. All these qualities are necessary for ‘life’, they are each crucial in isolation but powerful when imparted to children. These kids are our future leaders, they are our future Doctors, Lawyers, Politicians and business owners, do we really want them growing up not understanding the value of a dollar?
Being a good financial role model to your child can be challenging with many parents preferring to discuss sex and dating, or drugs and alcohol rather than money and finance! We understand that money management skills start at home, but exactly where do you start on the journey to teaching your kids to be good with money?
Experts believe the earlier you start the better. My three year old can only count to 25 at this stage, but she gets excited when she gets another 5c to put in her clear piggy bank. She loves watching her piggy bank grow and the noise it makes with more coins hit the container!
An eight year old is able to do some family chores, generally understands right from wrong and can change their behaviour to illicit the desired response from a parent. This observation serves as great fodder to understand now is the time to begin teaching the fundamentals of money. The experts believe that teaching children about money early in life can pay huge dividends, in the short term it assists with numeracy skills, saving and smart spending habits however in the long term, it can help them avoid unnecessary debt, bad spending habits and create positive financial habits for the rest of their life. When you look at an eight year old and understand the gift you are giving them is invaluable life skill, surely that is wonderful result for a well-meaning parent?
To help you become savvier with money yourself, and in turn be a better ‘financial’ role model for your children, consider the following:
- Enrol in independent personal finance education courses – they are often quite affordable with the information tailored for busy, heavily committed families.
- Understand your own financial situation. Ensure you have a working budget and know your expenditure to ensure you have maximised every opportunity to save, pay down debt, minimise your tax liability and contribute to investments (be it shares, property or business).
- Learn from your mistakes. If you’ve ever made bad financial decisions, don’t hide them. Be open to discussion, give yourself permission to make mistakes and vow to learn from them. They say a smart person learns from another person’s mistakes so don’t be afraid to share your experiences (the good, the bad and ugly!) with your children. You might be surprised at how much they appreciate your honesty, value your opinion and will ask your thoughts about financial matters going forward.
- Remember your role as a parent. Sometimes, especially as your children get older, it is hard to distinguish the grey line between being a parent and being a friend. If you have set limits and guidelines, especially in relation to financial matters, don’t be afraid to follow through and keep up the family rules and regulations, especially when it’s in the best interest of your child.
- Use every opportunity to create financial awareness for your children so they can truly understand the concept of money, saving and investment.
- Set clear boundaries on pocket money or ‘money for chores’ to help better understand what it’s like to get paid on a fixed schedule for doing regular work (excluding household chores which should be expected as part of a busy family!).
- Explaining to your children the real differences between wants and needs, how to set goals and how to save part of their allowance
Teaching your children great financial habits is a skill for life and the easiest way for a parent to impart this information is to lead by example. Good money management skills is reflected in your children’s core values as they grow older, provides for an honest work ethic and encourages philanthropy and good fortune which is all great results for a loving parent!