Fam­ily mat­ters En­cour­age en­ter­prise

Parenting - - Contents -

How to raise money-savvy kids

IFi­nan­cial per­sonal trainer for en­ableme, and mum of three, Katie Wes­ney, shares her ex­pert ad­vice on how to raise money-savvy kids.

had an awak­en­ing a cou­ple of years ago when my el­dest asked me to buy her a board game in Farm­ers. My stan­dard re­sponse was, “Okay. Put it on your birth­day list and we can dis­cuss it later.” (That vague, non-com­mit­tal birth­day list that no one could ever re­mem­ber). She ques­tioned me, “Why should we wait, Mum, when you never do? You buy ev­ery­thing you want.” I didn’t have a leg to stand on. I re­alised I was fail­ing to im­part re­ally im­por­tant in­for­ma­tion about money. She couldn’t see in­side my head to dis­cover that my shop­ping de­ci­sions were based on a bud­get and a care­ful spend­ing and sav­ing plan. From her per­spec­tive, it was as if I would an­nounce I needed new boots and sim­ply go to the shops and buy them right away. I knew I had to lift my game.

Teach­ing money skills to kids in a world where in­stant grat­i­fi­ca­tion is king, is tough. We have fast food, cell phones and emails, all of which dis­cour­age wait­ing around. Com­pound­ing this, most of us don’t use cash, pre­fer­ring to sim­ply swipe a card. So many chil­dren grow up be­liev­ing money grows in a money ma­chine and that there is an end­less sup­ply avail­able. Even though it’s tough, it’s re­ally im­por­tant to en­cour­age our kids to have a healthy re­la­tion­ship with money. We need to help them feel con­fi­dent about man­ag­ing their fi­nances – a skill that will set them up for life and turn them into so­cially re­spon­si­ble peo­ple. Here are some help­ful things to con­sider to get you started.

Be a great role model

Your child will fol­low your ex­am­ple, not your ad­vice. Al­ways re­mem­ber they will fol­low what you do, not what you say.

Teach your kids about money

Talk to your chil­dren about money from a young age. Show them coins and notes. Talk to them about how you earn your

money as a fam­ily and what you use it for. Ask them to count out change to pay for things. Money is not a taboo sub­ject nor is it bor­ing. It’s fun­da­men­tally in­trin­sic to our lives.

Teach your chil­dren that in­come less ex­penses equals a sur­plus or deficit. A sur­plus is good and means you have choices or op­tions. A deficit is a prob­lem.

Set a bud­get and stick to it. In­volve your chil­dren. Let them know how much you are spend­ing on gro­ceries, chil­dren’s ac­tiv­i­ties and hol­i­days. Money is not in­fi­nite and we have to make choices.

If you’ve gone over bud­get at the su­per­mar­ket check­out, ask your chil­dren to put some­thing back (how­ever awk­ward). It’s a great life les­son.

Each hol­i­day sea­son, a lot of my clients will have a con­ver­sa­tion with their chil­dren about how much the fam­ily has to spend over the hol­i­days. What spe­cial ac­tiv­i­ties do the chil­dren want to do? They can’t do ev­ery­thing so they have to make com­pro­mises. It’s great prob­lem solv­ing.

Try and use cash for every­day items such as gro­ceries, take­aways etc. It’s eas­ier for chil­dren to un­der­stand the value of money when they can see you us­ing it.

Show your chil­dren that every­day be­hav­iours can mean you have more or less money left over at the end of each week. Shorter show­ers, wash­ing only dirty clothes and switch­ing the lights off when they leave a room, all mean you spend less on power. It’s im­por­tant for your chil­dren to re­alise it’s not how much you earn that de­ter­mines your fi­nan­cial fu­ture, it’s what’s left over!

Stand up to your kids when they say to you, “But ev­ery­one else has/does...” It’s okay to re­ply, “In our fam­ily we choose to spend our money dif­fer­ently.”

Chil­dren are eas­ily ma­nip­u­lated by ad­ver­tis­ing. Talk to your kids about the mes­sages be­hind dif­fer­ent ad­ver­tis­ing. Hap­pi­ness is not in things but in us. Ev­ery child has the right to love, re­spect and kind­ness. Is­sues arise when your child feels that the world owes them stuff and they have the right to de­mand it!

fam­ily mat­ters

We all want our chil­dren to be hon­est and have strong val­ues. The small things we do go a long way to teach our chil­dren the im­por­tance of hon­esty and be­ing trust­wor­thy – like re­plac­ing some­thing you broke when you bor­rowed it or giv­ing back money if you were given too much change. I had a client who shared her card pins with her chil­dren. Her daugh­ter gave her EFTPOS pin to a boyfriend who stole $200. Our chil­dren will do what they see!

Be hon­est about the bad fi­nan­cial de­ci­sions you’ve made – that credit card you couldn’t pay off, or the ex­pen­sive dress you only wore once. Let them learn from your mis­takes.

I be­lieve that chil­dren should help with every­day house­hold chores be­cause they are a mem­ber of the fam­ily, not be­cause we pay them. In our house, pocket money is a priv­i­lege which we may stop as a con­se­quence of not do­ing chores. Chores like mak­ing their bed, clear­ing the ta­ble and tak­ing out the rub­bish, we ex­pect our chil­dren to do as part of our fam­ily team. Our chil­dren also have the op­por­tu­nity to earn ex­tra money through big­ger chores like wash­ing the car. My el­dest daugh­ter wanted an ipad. My hus­band said we’d match any sav­ings and so she did ex­tra jobs around the home/at her grand­par­ents etc. It took her al­most a year but she got there.

Pocket money usu­ally starts around five to six years old and a good rule of thumb is $1 for ev­ery year of age but this is some­thing that your fam­ily needs to de­ter­mine. The three jar sys­tem works well. You set up three clear jars, la­belling them 'sav­ing', 'spend­ing' and 'giv­ing'. You can de­ter­mine with your child the right split and your child should de­cide where the 'giv­ing' por­tion goes. This is a great an­ti­dote to en­ti­tle­ment.

As chil­dren get older, par­tic­u­larly around high school, it may be ap­pro­pri­ate for your child to get an al­lowance to pay for things like cloth­ing and en­ter­tain­ment. This should be a rea­son­able amount so your chil­dren learn to bud­get, make choices and live with their choices. Yes, they will prob­a­bly get it wrong at the be­gin­ning but much safer to do this with their clothes at 14 rather than not be­ing able to re­pay a loan at 18!

Pay it to younger chil­dren in coins so they can split it into sav­ings/spend­ing/giv­ing.

Set the day and time that pocket money is given out each week (try not to for­get!).

Don’t res­cue your chil­dren. Let them make mis­takes.

You can set guide­lines – for ex­am­ple, they can’t spend all their money on junk food. Learn­ing to set goals and find­ing ways to achieve those goals is im­por­tant. Easy hand­outs dis­em­power rather than mo­ti­vate. If our chil­dren are given easy money, there is no need to work to­wards a goal. One of your goals for your kids is to have them fi­nan­cially in­de­pen­dent – not lean­ing on you way past them leav­ing home.

En­cour­age your chil­dren to think cre­atively to find ways of earn­ing money. My daugh­ter is very en­tre­pre­neur­ial, and it has cost me big time, but I know it will pay off in the long run! Her first at­tempt last year was a cookie stall out­side our house. She lost in­ter­est half­way through. Not quite soon enough to re­mem­ber she’d left our lit­tle wooden kids ta­ble out on the grass verge, which was promptly taken, de­spite it not be­ing in­or­ganic col­lec­tion time! The next at­tempt was bak­ing, where in­stead of mak­ing two dozen cook­ies ac­cord­ing to the recipe, we had a mal­func­tion and made a gi­nor­mous cookie that took up the whole tray (not sell­able but it tasted great). Most re­cently, in­stead of pay­ing to have some­one de­liver pam­phlets for my busi­ness, my daugh­ter and I de­liv­ered them our­selves, and I paid her to help me. We both (semi) loved it.

Teach­ing kids good money habits with Katie Wes­ney Tues­day, 13 Septem­ber, 7.30-9pm Go to the­p­ar­ent­ing­ for more de­tails and to book

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