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Money is one of the basic necessities of modern life. It affects nearly everything you do and every choice you make - whether to stay in or go out, whether to accept an extra shift at work, whether you should rent or buy - it all comes back to money.
Teaching children about money is a strange topic to approach. For many people, money talk is still taboo and lots of families simply don’t communicate their money situation at all. This is a real shame because parents can have a huge positive impact on their children. Even with the internet, it’s not likely that your kids are going to google things like ‘financial services research’ is it?
You don’t have to be a perfect parent to impact the wisdom you have gained through your own experiences of money. Indeed, explaining your own financial situation to your children is a good way to show how you can make mistakes, manage your income and work towards a brighter future. Treating each experience as a life lesson is a good attitude to have.
For all that money is such a taboo subject, in theory, it’s pretty basic. The first rule is that the money that comes in should be more than or equal to the money that goes out. Whether that money comes in through work, pocket money or a side hustle, it needs to cover your basic needs.
Budgeting is a topic that must be covered as soon as possible. Teaching a toddler about saving up might sound ridiculous but at this young age they are perfectly capable of seeing what deferred satisfaction might get them - even if they are highly tempted along the way! Gradually introducing your children to budgeting by giving them a set amount each week will put good money habits in place without too much hassle. When they get a little older, you can change to a monthly payment which will better reflect a salaried lifestyle.
For a child learning the ropes, a salaried job is basically very unlikely though you could give them an allowance as though going to school is their job. You can also introduce the value of money by getting your kids to do chores and setting the value of each job. For example, the average parent will pay around $3.73 for a child to wash their car.
Giving your child the chance to earn some money will show them how much their time and effort is worth but by asking them to then choose and pay for their own stuff, they will also be able to compare values. Things like toys, sweets and other small purchases like stationary or items for craft projects could all easily come out of a young child’s pocket money but as they get older this list might expand to include things like clothes and money for going out.
Encourage your child to bring along some of their money when you go out just in case they see anything they would like. This gives them a bit of independence, even if they have to run their purchases past you before they get to the till! However tempted you are, try to make sure that you don’t top up your child’s pocket money or get manipulated by tears - they have to learn to budget and be patient and it is a lot easier when there’s just a toy at stake.
If you do one thing for your children, please be open about money. Let them know that it’s okay for them to discuss their money with you and discuss your money with them too. They might not need to know the fine details of what is going on but making a point of telling them why you make certain decisions is a good start.
Lots of parents assume that talking about money will make their children feel anxious. The reality is that kids who talk about money with their parents tend to have a better understanding of what is going on so they can deal with their worries a little better. You might not realise it, but most kids know when something is wrong and not being able to identify it is more stressful.
Money may never be a comfortable subject but the more open you can be with your kids, the easier it will be for them to learn good habits and understand how to deal with any troubles they encounter. Education is everything when it comes to money and the more you know, the better you can handle it.
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