Here are a few tips to help you teach your kids how to manage their money – by setting a good example ourselves
Having a household budget and a financial plan, with the family involved, is a great way to teach children how to manage finances. As a family you can set some healthy money rules, such as:
· Save 10% of your net income for emergencies
· Donate to a cause that is close to your heart
· Invest an additional 10% of your net income in growth assets to start creating real wealth
· Pay your kids pocket money and set some ground rules
· Understand the difference between needs and wants
· Pay for all needs on time and only consider buying wants if there is money left over
· Never buy wants (frivolous items) on credit
POCKET MONEY GROUND RULES
The sooner children start handling money, the sooner they can start learning to manage it. Link their pocket money to chores they do around the house so that they learn that money has a value, and that you work for the money you earn.
For older children rather than buying them their toiletries, air time and clothes, give them the money you would spend on these items each month and make them budget and allocate it. The first month they may blow it all on airtime, but within a few months they’ll have learnt how to find a balance. Never give your children money “in advance” – that will only teach them to live in debt!
Encourage your child to put money away for savings, especially when they receive birthday money or money from a holiday job.
Let them create a goal that they can save towards – for younger children it may be an expensive toy. Older kids may want to start saving towards a car. A goal gives them motivation to save.
Children are by nature very entrepreneurial – they don’t have the fears that their parents may have.
If your child has an idea on how to make money – selling cookies to their friends every Friday, perhaps – help them write up a business plan so they may better understand the costs versus the income.
Children are also community-focused and tend to want to help those less fortunate. Chat to your child about a charity they may like to assist – either financially or through their own time.
