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In today's fast paced and hectic society, a parent's role in educating their kids on the value of money can become extremely challenging. Yet without a solid grounding in the importance of being "penny-wise" and responsible in their financial undertakings, kids can end up being dependent on their parents well into their adulthood.
Indeed, many graduates these days take their time looking for the "right job" while enjoying rent-free living at home and receiving entertainment allowances from their parents. Even when young, kids are demanding more and more expensive gifts from their mums and dads without fully appreciating the hard work that their parents put in to make the money. Perhaps parents themselves find it easier to give in to the child's demands rather than put up with the incessant whining, the tears or the tantrums (especially in a public place!)
When kids are not equipped with financial skills or are taught lessons on being money savvy when young, they are robbed of their future ability to cope and succeed in life. When you give a child cler and practical guidelines - by word and by example - you are much more likely to raise a young adult ready to face this tough economic world. It requires practice to understand how to use money wisely and what it takes to earn it. By reinstating "old-fashioned" values about money and work, you can give your child a precious gift - the key to self-sufficiency.
Here are some tips on raising money-wise kids:
1. Teach Saving
The good old piggy bank is fast being replaced with savings accounts at banks catering specially for children. By the age of six, kids will have understood that banks keep their money safe and even add extra (yay!). Open an account in your child's name and let them keep their own pass book. The added responsibility will help them think maturely and do things the "adult way" from a young age. This experience can make the concept of saving money a lifetime habit.
2. Allow them an Allowance
It takes many years (and usually many mistakes) before we learn to become smart and responsible consumers who can balance our cheque books and avoid debt. By providing kids a regular allowance that accounts for food, snacks, books, toys and entertainment, we can teach kids to budget their money from a young age - a practice that they will hopefully sustain into adulthood.
3. Involve Kids In Household Chores
Kids have boundless amounts of energy that can be put to good use by getting them involved in work around the house - voluntarily or otherwise. When they realise the large amount of effort that goes into keeping a house in order, it develops their natural sense of industry. Children's work will be imperfect, however, so it is important not to criticise or they may lose interest.
4. Avoid Using Cash To Bribe
Motivate kids with hugs, kissess, praises or even a congratulations card. When they have worked hard, then take them out for a movie or to their favourite restaurant. Avoid using cash to bribe kids into working or studying harder, as they may get used to it and expect consistent rewards.
5. Be Open About Family Finances
Children need to know about the family budget. It will be easier for them to understand their limitations when they know where the limit is coming from. Once your kids are in their teens, you may want to involve them in the family weekly or monthly budgeting meeting. By teaching them the myriad of monthly claims on their parent's income, you may motivate them into becoming part of the solution to money problems.
6. Tell Your Children About Your Work
Children need to know how their parents earn the monthly income to strengthen the connection between work and money in their minds. It's good to take your kids to work sometimes when the load is lighter to give them an idea of adult working life. My daughter Emma loves going to work with me every Saturday!
Raising self-reliant children requires parents to lead with their heads, and try their best not to give in too much to their kid's demand - as adorable as they are! That's the challenge I face, but the effort will pay off as you see your kids develop sound financial sense and a respect for work ethics. I learned mine from my late father.
by Shahema Baiza-Yip
Financial Planner & mother of four
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Copyright 2007