Are you a good financial model?
THEY DO NOT DO WHAT THEY ARE TOLD BUT RATHER EMULATE WHAT THEY SEE – EVEN WITH MONEY Benefits of teaching your kids about finances early on can pay great dividends.
As a parent, how are you assessing, and ensuring, that you’re passing along the correct financial skills to your children? Are you raising children who will be sloppy in the way they manage money?
Remember that children see almost everything. They don’t do what they are told but rather emulate what they see, so it’s critical to ensure you model a financial structure worth emulating.
It is normal to struggle with your own economy, even as a parent. The important thing is to show your child the valuable things about setting goals, saving and spending. Educating your children through your actions is about more than just telling them how much things cost.
It’s about being a positive example: paying your child’s allowance according to your agreement, saving for purchases, and avoiding over-spending.
Words are easy to speak, but action is far harder to fake.
The benefits of teaching your children about money early on can pay dividends both immediately and in the longer term.
Children will develop strong saving habits, learn how to make smart purchases, begin to understand the true meaning of “investment”, and perhaps even learn why they can’t immediately get everything they want.
In the long term, educating children about money now can help them avoid debt as adults. And by teaching children the value of saving for the future at a young age, you can help them establish the groundwork for a lifetime of financial security. Budgeting doesn’t have to be a solitary act. Instead of balancing your monthly budget alone, invite your child to watch you go through the process.
Explain how to take stock of how much money is coming in and going out of the household for that month, and how you plan your spending, so you don’t run out of money.
This will help your child see that your pockets are not an endless source of cash. I love being a father to my two girls. It’s incredibly rewarding, but it is even more work. It’s my responsibility to teach them to be good citizens of the world, and the best way to do that is by demonstrating good behaviour.
Money is never a taboo subject in our home and I always strive to make sure my words and actions are in alignment. Because when they don’t match-up, the girls always notice and rightfully call me out. They will be great future financial role models to their own children someday and that makes me feel good. I ensure the future success of my bloodline by investing time in teaching my children the correct financial behaviours. If I don’t do this, why then would it matter if I’m wealthy or not?
If I am wealthy, they will soon misuse their inheritance and deplete the “family money” due to not having the necessary skills to manage that inheritance appropriately. If I’m poor, they will most likely also remain poor because they will lack the skills to manage their funds, dig themselves out of poverty, and do better for their children than I did for them.
Mduduzi Luthuli is a director
Words are easy, but action is far harder to fake