As parents, it's our job to tackle the difficult questions and handle the awkward conversations. And, when our kids are young, we're expected to know all the answers.
So what happens when your kids ask you about money? Do you cough and change the subject? Do you tell them to ask in school? Or do you have a conversation, but worry about whether you're giving them the right information or the tools they'll need to become financially responsible and secure adults?
Being good at managing money isn’t all about being good at maths; the key to understanding the basics of managing money comes down to having the right attitude.
For most of us these attitudes are formed between the ages of 5 and 12. This means that, as parents, you have a unique opportunity. As parents, you have the greatest influence on your kids' behaviour and attitudes at these ages, and you can teach your kids about money and what to do with it.
Here are 7 tips for parents wanting to educate their children about money.
1: Understand your own money attitudes
Be aware that the way you save, give and spend money speaks louder than words.
As a starting point, reflect on your own money attitudes. Believe it or not, some of them may not be the right ones to teach your kids. Use this as a basis to create new, positive money attitudes that you can pass on to your kids.
2: Talk to your kids about money
Start by asking them the question: “Where does money come from?”
While this may sound like a simple question, our kids live in a society where little or no money changes hands. Just a few decades ago we were paid in cheques or cash, but in a world of credit cards and internet banking, money has become invisible. This makes it more important than ever for kids to understand how money comes into your household – it doesn't magically appear; it's paid through your work.
3: Teach your kids what to do with money
Start giving your kids weekly pocket money. Give them two empty jars – one for saving and one for giving.
Explain to them that they are receiving pocket money because you believe they are old enough to start being responsible for their own money. Let your kids decide how they want to spend their pocket money. Encourage them to make decisions and allow them to make mistakes when the stakes are low.
4: Teach your kids to save
Ask your kids what they want to save for and make it visual.
Stick a picture of their “goal” on their bedroom wall or their money jar so they see it regularly. As time passes by you will find that your kids will start to make better spending decisions, knowing that what they don't spend will help them achieve that goal.
5: Teach your kids to give
Ask your kids if there is someone they would like to help.
See if there's a connection between who they would like to help and an existing charity. Give them the opportunity to give some of their pocket money to their charity of choice. To make it fun, donate as a family. Using money to give is an important attitude. Not only does it make the person on the receiving end happy, but it brings happiness and a sense of meaning to the giver.
6: Teach your kids about debt and how to avoid it
Do not give in to your kids’ wants. Let them use their savings to buy for their “wants”.
Debt is a symptom of spending money you don’t have. Teach your kids not to borrow to buy “wants”. If your kids need to borrow money, make it fun by using their weekly allowance to pay you back. Make it visual by setting up a separate money jar so that your kids can physically repay you. Do not let your kids borrow money to repay an existing loan.
7: Teach your kids to follow their passion
Share your enthusiasm and love of a subject with your kids and they will begin to ask themselves what they're passionate about.
Being able to successfully manage money (from a young age) will provide your kids with the freedom and security to do what they love. And the beauty of doing what you love is that you attract opportunities (and money). You “jump” out of bed every morning, excited about the day ahead. You can also make a difference to people’s lives. Following your passion is not just a money attitude, it's a life attitude.
Buy Robert's book from his website RobertBihar.com
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