5 ways to teach Hamilton children healthy money habits
As a Hamilton parent, you try to ensure your children have the skills to make smart financial decisions – and what children learn now, they’ll remember in future.
For example, you tell them about the importance of saving or the power of compounding interest. That’s practically doing your children a future favour, right?
Well… yes. Provided you go about it the right way.
Because if you don’t, you could be, unwittingly, providing your children with negative money messages, rather than productive, useful, positive ones.
So what’s the best way to do this?
Here are five common, simple ways to ensure your children develop healthy money habits.
1. Reveal the magic behind digital money
Your children have likely seen you pay for hundreds of transactions without glimpsing cash changing hands. Really, where would we be without tap and go, amiright?
For small children, looking on as adults simply tap or swipe a little piece of plastic, or their smart device, it can seem like money problems are literally solved with a wave of the magic wand (or card).
Thing is, out of sight is often out of mind. If they don’t see the money, it can be hard for them to appreciate the value of it.
The value of money is a fundamental conversation topic to have – and continue to have – with children. A good way to start is to explain how your earnings are deposited into your bank account – which is where the money sits until it’s summoned, via your card or device to pay the bills.
For older children, consider showing them how taxes are deducted from your salary.
Keep in mind that while the digital world has many advantages and efficiencies, what children can see, they can understand.
2. Plan, budget and spend wisely
Frequently buying things on an impulse could send the message that it’s fine to spend without planning.
Sticking to a budget is key to avoiding impulse-buying.
To set an effective budget, consider working with a professional financial adviser. Your adviser may help develop a budget that factors in your income, expenses and financial obligations.
Then, make sure your children are aware there’s a budget that you are working from – and that it’s been carefully prepared to make sure you can have all you need – and (hopefully) allows for the reasonable ‘want’ to be purchased too (after a little saving, of course).
3. Teach them independence
This tip actually applies to much more than just financial awareness.
It’s convenient to do everything for your children. But by giving them a chance to have their own money and decide how and where to spend it, they could learn powerful lessons about budgeting.
For adult children, always offering them financial help can create a cycle of dependency and permission (whether its intended or not) to be unaccountable to their spending habits. Letting them make their own money decisions could help them develop financial responsibility.
4. Include them in budgeting
Many parents keep household financial planning and budgeting to themselves.
While you don’t have to fully involve your children in managing your family’s finances, giving them a role to play, such as getting them to do grocery shopping using a set budget, can teach them lessons about money.
If your children are old enough to earn some income, why not get them to pitch in to help achieve a family goal?
This is one of those areas where it can be a fine line between sending a positive message, or setting a negative mindset. Make sure the budgeting discussions and processes aren’t too austere – that you’re sending your children a message it’s only the necessities that can be accommodated – don’t make them feel ashamed for needing something that’s not part of the budget, or afraid to ask if they can have something out of the ordinary. It’s about education, not punishment or denial.
This is a good segue into our final tip…
5. Use your influence positively
You can strongly influence your children in relation to money, so it’s important to pass on smart money management skills.
Responsibility is paramount, but try not to make your children ashamed or completely adverse to spending money – that’s not practical. A well-rounded understanding of money should be the goal.
If you don’t know where to start, reach out to your financial adviser to help you stay on top of your finances through proper planning and budgeting – they’ll have more simple tips that can benefit the whole family, too.
Aime Sandri is an Authorised Representative of Lonsdale Financial Group Ltd | ABN 76 006 637 225 | AFSL 246934
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