We are on our summer holidays in Canada, and it has been a wonderful opportunity to teach my children the value of money and the importance of taking control of it.
As my little ones are getting older they are becoming astute with what they need money for and so are very interested in earning money. My household pocket money regime is set up slightly different because we do not typically pay pocket money for what we consider"inevitable communal tasks for keeping our home healthy & happy" and so things, like loading the dishwasher or tidying up their rooms, do not earn them any money. They earn money for doing extraordinary tasks, outdoor chores like weeding and completing challenges which we set them. We additionally give them holiday money when we are going on holidays and they are so blessed to have grandparents, uncles and aunts that give them holiday money too. So you can imagine the excitement on the flight when they are toting up what they are going to spend on what.
So this week I want to share 3 tips I use to help my children learn how to manage money.
Have Financial conversations with your children:
As we start getting ready for our holidays we speak with them and discuss how much pocket money they should get and what justification they have for the amounts they propose. Kaylah has mastered the art of pitching and she came up with a pretty solid case for the amount she suggested. Kian, on the other hand, asked for exactly what it will cost him to get the skateboard he wants. So we examined the impact of each one’s justification. This time for Kian it was trying to discuss shortsightedness, thinking "skateboard" alone is not holistic planning he had to go back and think through all we were going to get up to whilst on holiday. For Kaylah, it was the dash to spend, she needed to consider giving and because she is 10 in her case we have a 70-10-10-10 principle in place for all the money she receives. Having conversations like this with your kids will help them think money decisions through and provide a safe environment for them to ask you anything about money.
"Children need to have conversations about money". Russell Winnard from Young Moneysaid, “it is important to talk about where money comes from and discuss the differences between needs and wants.”
Be a role model, set them an example
A study by the University of Cambridge found that money habits in children are formed by the time they are 7 years old. We are our children’s role model and as the saying goes, it is a more effective lesson when "actions speak louder than words" If you are constantly spending on impulse or arguing with your spouse or partner about money, they will notice that. So try to set a healthy example for them, let them observe your budgeting and planning. For this holiday I let them understand the cost of the holiday by budgeting for it with them. We drew up a draft of all the costs together including their and my spending money and as we are here I actively ensure that I refer to my own spending money. We each wrote a must-do list and put money against each of these so I ensure I pull it out and discuss where we are at on that list. Children will be much more likely to follow if they observe you living it too.
Give them Enterprise Education
At MoneyMatiX as part of our mission to create financially capable communities, we hold entrepreneurial events for children aged 10 to 18. We believe it is never too early to
introduce the basic principles and rewards of entrepreneurship to give young people
financial capability life skills that an academic education alone cannot fulfil.
In the age of a rapidly changing jobs market, young people need to be innovative, creative and adaptable. One of the best ways to teach your children about handling money is to give them a chance to make some of their own!
Teaching your children about money at any stage is going to take time on your part. It will not always be easy. However, if you want your children to know how to successfully manage their money when they get older, taking the time now will be worth it.