By Jodie Nolan, MBus (AppFin)
Most parents want their children to grow up with the very best education, be street wise and savvy when it comes to ‘life’. Part of that desire to see them do well, is the want for them to excel financially. But if you are like most parents, you may struggle personally when it comes to money management skills. Unfortunately it is a parent’s behaviour that leads by example in most cases as children learn to mimic the actions and traits of those around them.
Being a parent these day’s comes with huge responsibility and all too often there is the guilt that is associated with not spending enough ‘quality time’ with them, trying to find the right ‘work/life balance’ and providing a solid start for your child. Add to this the stress of teaching them to eat well, have great manners, be studious, courteous and active, we run the risk of trying to do it all! Being a working mother of two small children myself, I am all too aware of the consequences of being a ‘superwoman’ but am a firm believer in being able to have it all.
Some parents believe that their children have no business knowing their financial situation, or they fear it might be leaked as ‘small talk’ fodder amongst their school friends. Other parents believe their children are too young to understand or care about financial matters so avoid the discussions altogether. Researchers believe that it is an innate lack of confidence in the parent’s own financial knowledge and management that stops them from discussing key financial issues with their children. In addition, most experts agree that you can’t rely on our schooling system to teach your kids about money and finance. In my opinion, coming from an extensive finance background I would totally agree that you can’t rely on the school curriculum to teach your children crucial money skills. The lack of financial literacy in Australia is a shame. 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! Yet many parents rightly believe that money management skills start at home. So, where do you start on the journey to teaching your kids to be good with money?
In my opinion it is important to start as early as possible. 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!
The experts believe that teaching children about money early in life can pay 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. This ground work in financial education is invaluable to help your children creative positive associations with money, the concept of earning money and smart spending.
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. There are only a few reputable groups around, who are not affiliated with banks or financial companies so do your homework! Often these courses are only a few hours in duration and quite affordable with the information tailored for busy, heavily committed families.
- Understand your own financial situation. Ensure you have a working budget, you know where your money is coming from and going to. 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. All too often a manipulative teen can convince a well-meaning parent to give them more money just this week!
- Use every opportunity to create financial awareness for your children so they can truly understand the concept of money, saving and investment. Perhaps setting 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. Ideally as parents, lead by example. Great 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!