The best way to make sure your children have the tools to make wise financial decision when they grow up is to start teaching them from an early age. Of course, I'm not suggesting you teach your 5 year-old about the ins and outs of the stock market.
All I am encouraging you to do is to allow them to make financial decisions that are appropriate to their ages, whilst guiding them and using it as an opportunity to teach them money matters.
Here are some crucial things you want to consider:
1.) Allow your child (from age 4 or 5), to have some money that they can manage themselves. This could be achieved by giving them pocket money regularly.
2.) Closely observe how they spend the money and have informal discussions with them about it.
3.) Praise your child for making the right choices and tell them why it was the right choice.
4.) Explain to your child what they could have done differently, and why, anytime they make the wrong financial move.
5.) Let your child appreciate the fact that money is earned by doing honest and diligent work. Giving them jobs to do, and paying them for doing it can sometimes achieve this.
6.) Encourage your child to use their skills and talents to make extra money. Especially from the age of 10yrs.
7.) Insist that your child gives you a breakdown (budget) of their expenses, before you work out with them the amount of pocket money they would receive. This helps them learn how to budget.
8.) Open a savings account for your child and help them get used to putting some money aside for the future. Let them experience the thrill of watching their money grow. This also means they get used to not having all their money easily accessible in the house.
9.) Do not always come to your child's rescue when they ask for extra money, especially once they become teenagers. This would help them in the future to live within their means and not get into debt.
10.) Review the money you give to your child seasonally and insist they produce a budget detailing their income and expenditure, before you increase or decrease their pocket money.
11.) Discuss the difference between what they really need and the things they just want to have. Let them know the difference between consumables and luxuries. This will help them in future when they need to manage on a tight budget.
12.) By the time your child is 16, start sharing with them the reality of living expenses. For example, the cost of rent, gas, electricity, managing a car etc.
13.) Encourage your child to get a job once they are able to. Insist that they use some of the money they earn to support themselves. This will help them understand the real value of money, because they have to spend the money they have worked for, not the money you have worked for.
14.) Be prudent with your own finances and live what you teach. Your children will not take you seriously if they watch you do the exact thing you tell them not to do.
15.) Encourage your child to save, by not giving them all the money they need for major purchases. Let them save some of their own money to make a contribution to the cost of their major purchases.
16.) Be open to your child about the dangers of credit cards and store cards and getting into debt. Even if you are in debt yourself, let them know the limitations and restrictions it has imposed on you.
17.) Encourage your child to be generous and to give a proportion of their pocket money (or wages) to their church and to charitable organisations. This would help them experience the joys and rewards of giving. It would also guard against selfishness and greed.
Finally, remember that every child learns by repetition, so don't just say or do these things once; say and do them over and over and over again!
If you do these things, you will be well on your way to giving your children the financial tools and wisdom they need to for their future. In fact, you will be giving them a priceless legacy that will be passed from generation to generation.
It's never too late to start. Even if your child is much older, start TODAY! You would be glad you did.
By Shola Peters
Author of Why Can’t We Talk About It?
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