One of the best lessons you can instil in your children from an early age is to develop a positive money mindset. It’s a skill they will take with them into adulthood and can be the difference between living from pay day to pay day or having financial freedom as an adult. I’ll be sharing my top tips to help your kid understand and appreciate the value of a dollar.
Set a good example
The younger years are very formative and the way we raise our children can impact them later in life. Children begin to develop money skills from as young as 3-4 years old. This is the best time to introduce them to the concept of money and exchanging it for goods. Once they turn five, introduce it’s time to teach them about pocket money and the value of money. Remember, whatever you teach them needs to be mirrored by you. You can’t expect to teach your children to save for toys and ‘wants’ when you rush out and give your credit card the ultimate workout. A positive money mindset comes with practicing what you preach.
Watch your words
Kids listen to and absorb adult talk much more than you realise. If you’re struggling financially and don’t know how you’re going to meet all your bills, don’t have these conversations in front of the little eavesdroppers. Children that are old enough to understand may take on your financial burden, worrying about whether they may not have anywhere to live or be able to afford to eat. When money is tight, as a parent, the default mechanism is to resort to clichés our parents used to spout off, such as:
- We can’t afford it
- Money doesn’t grow on trees
- If I had a dollar for every time you asked for something, I’d be rich!
- When I was your age, we had to walk miles to school with no shoes, and you didn’t see us complaining!
These sayings seem harmless, but it teaches your kids that money is a scarcity. “We can’t afford it” and “Because I said so!” don’t teach the value of money. Instead of pulling out clichés, involve your kids in positive financial planning conversations.
Learn to budget
~Novel Serialisation: Heavens Fire~
Turn budgeting into a fun game that you can involve the kids in. Pick savings goals together as a family. Be transparent about how much money is incoming and what your expenses are. Ask your kids to help you work out how much you need to allocate to your outgoings, the amount to put towards your goals and how much to save. Let the kids plan the shopping budget and make a list of must-haves, calculating the cost of each item as it’s added to the shopping trolley. It may be a slow and painful supermarket experience for you, but it will be an invaluable life lesson for them.
For younger children, you can get them to help with budgeting their lunch money on canteen days or set up an at-home play shop. This will involve keeping your empty cereal packets and tins but is a fun way for the little-ones to learn the value of money and budgeting.
Close the doors to the bank of mum and dad
If your kids grow up thinking the bank of mum and dad will come to the rescue 24/7, it’s best to manage their expectations while they’re young and malleable. Children that are used to demanding and getting exactly what they want, will grow up, move out, but you’ll still be paying their way even into adulthood. By saying no, they’ll soon learn the consequences of overspending.
Creating a positive money mindset starts from a young age. Never underestimate the ability of children to mimic your approach to managing finances at a young age.
By Gerry Incollingo
Gerry Incollingo is the Managing Partner of LCI Partners, a firm that specialises in accounting advisory, lending, wealth, property, insurance and legal
