Financial Planning

What parents should be teaching children about money

As a parent, you want to give your children every opportunity in life, and that undoubtedly begins with the best education you can offer them. You hope your children will do well at school, obtain a qualification and pursue a career, which will ultimately enable them to gain independence and financial freedom. No matter how qualified or well paid your children become, it may all amount to nothing if they cannot manage their money. Fortunately, as a parent you have the power to equip your children with the tools they need to be financially savvy.

Here are some suggestions on how to equip children with the tools to be moneywise:

Involve your children in the household finances

Start making your children aware of the cost of essential household items by taking them along when doing monthly grocery shopping. Contextualise how much you pay for food in terms that your children can understand. For instance, explain to them that R200 paid for meat is roughly equivalent to 40 packets of chips. This will help to teach your children the value of money and the importance of prioritising spending based on one’s liabilities.

Teach your children to be smart with their money

Give your children the opportunity to handle their own money as soon as you consider them responsible enough to do so. Whether they receive pocket money for household chores, or earn money doing odd jobs for you or your neighbours, teach them to be disciplined with their earnings. Get a piggy bank or take them to the bank to open a savings account. Then make sure they live within their “means”. Try not to get into the habit of supplementing their savings when they run out of money. It’s important for children to learn at an early age that they cannot expect a bottomless source of income; or depend on someone always being around to financially bail them out when they overspend.

Lead by example!

Actions speak louder than words. Your little ones will learn as much from what you do as what you say, in some cases even more so. Demonstrating a healthy attitude to money, being responsible when it comes to expenses and debt, and teaching them the importance of making provision for unforeseen circumstances, will go a long way towards ensuring a good grounding.

Demonstrating that you, too, make sacrifices to ensure your family has a good life, even when you are no longer there, can help to instill important values in children from a young age.