We all want the best for our kids. But sometimes our misguided, but well intentioned, parenting behaviours can leave life long financial mindsets that can get our kids into financial trouble when they fly the nest. No one wants their kids to be facing homelessness or struggling to make ends meet as adults. If you are currently facing financial hardship yourself, then you are in the most powerful position to teach your children some really tough life lessons by (age appropriately) sharing your situation with them.
Countless studies indicate that beliefs and values are formed early in life. By sharing your struggles with your children and supporting each other through the process of financial recovery, you can all learn valuable lessons to move forward in life. Using and developing practical skills to reinforce those positive financial habits are the only way to make sure they embody the necessary means to a good financial end.
These seven practical tools will teach your children to develop their own money skills, values and beliefs. And set them up for financial success at the same time.
1. Give them an allowance
Cover their basic needs but work out their extras that you might buy shopping and give them a budget to cover those items themselves. E.g. deodorant, shampoo etc. They’ll allocate their budget according to their own needs. They’ll also learn to check their change, make sure they’ve calculated their purchases properly and start to take responsibility for their purchasing choices. This is also perfect to use as a means to …
2. Teach them how to budget
Instilling budgeting habits early is the best gift we could give to our children. We have an excellent budgeting blog that you will get a lot out of yourself and use it to start a conversation with your kids.
3. Teach them how to save
Every child will want, want, want so what better way to teach them to save for something by using their newly found budgeting skills to put money away for that special purchase. If you want to help them, instead of giving them a hand out teach them about borrowing too. You could lend them the money and have them pay it back with interest and show them how saving for something can be the better option. As they get older you can teach them about good debts and bad debts and how they can get into trouble. Most importantly! Don’t bail them out. If they spend unwisely and beg for a bailout, don’t feel sorry for them. The real world won’t. Harsh but true. Learning discipline with $5, is better than as an adult learning with $50,000.
Take things a step further by:
4. Involve them in the household finances
Money lessons are embodied in the early formative years by observing what’s happening in the family unit. By sharing what’s happening financially within the home context and giving them an awareness around financial stressors, they can pick up life long tools for coping well financially. They’ll have more of an understanding about why money isn’t spent on frivolous things, when money can be saved for more important things or to create family memories like holidays away instead of instant gratification purchases… which brings us to the next one…
5. Teach them to wait
Some kids (and even some adults) don’t grow out of the toddler “I want it now” stage of their lives. Having to fulfil every little whim when it comes to wants can be financially draining and even financially destructive when it becomes a habit you have no control over. Think about the example you set for your kids and would you want them to embody those traits. Don’t fool yourself into thinking that if you don’t say anything about it they won’t know, won’t pick up on it. Kids watch our every move.
6. Encourage them to work for their allowance
Many kids are just handed the things they want on a platter and never develop the whits to work for something important. This type of attitude can be treacherous as an adult and very tiresome for people around them as they constantly struggle to understand why in adult life people aren’t just handing everything over to them like Mummy and Daddy did. So unless you’re going to hand over your hard earned cash to your adult kids forever more, best instil a positive work ethic within their psyche early. Involve them in the house hold chores when they are still young and eager to please and be a part of everything with you. Some parents run around doing everything for their kids then complain when they don’t contribute to the household. You did that to them. Involve them early. Then when they are teens asking for money they know what they need to do to get it and they know how you like it done.
7. Encourage them to get a part time job
Kids who have developed a great work ethic at home are generally the best kids in the workplace. Why? Because they’ve been guided early by switched on parents. They don’t expect a five star pay for a half star effort and they don’t whinge and complain when they have to do something the boss asks them to do. They just jump in and do it. They generally get more hours and are always missed when they finish school to go make a life in the world. Isn’t that what everyone would want for their children? A great reference.
If you’re facing financial hardship we are here to talk about a solution. Call us on 1300 887 211 or Book a Free No Obligation Phone Consultation with our friendly team and we can discuss debt management options specially focused on your personal situation.