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Teach your children the value of money

Living a financially smart life can and should be inculcated from a young age.
Setting an example and teaching your children how to handle their own money can go a long way. Image: Shutterstock

Talking about money is high up on the list. Doing so in a calm, relaxed way and making use of everyday opportunities to demonstrate healthy financial habits is important. From a young age children witness how their parents interact with money, so demonstrating the value of money is vital.

Pay cash, not card

One way of demonstrating that money has value is to pay with cash when your children are around. Paying with a credit card sends the message that anything is available just by swiping a magic piece of plastic. Have a conversation about items that you consider essential versus luxury or just-for-fun items. Explain that it is not good to spend more money than you earn and that if you want something, you need to save for it.

Teach financial restraint by not giving into your child’s every wish.

Allowances provide practice for money management

One of the best tools for teaching children money management is pocket money, or an allowance. Experts differ on the age which this can start, but it is generally accepted that six is a good age. Start off with a weekly allowance for young kids and increase this to a monthly allowance for teenagers so that they can be challenged to make their money last. Tie the granting of an allowance into basic household chores, so that your child understands that you have to work for money, it does not simply get handed out. Talk to your children about what types of expenses you cover – electricity, food, house and car – and explain how they might spend their own personal allowance.

A good tip is to divide the allowance or cash birthday presents into a portion that can be spent immediately, with the rest being put away for the future.

By the age of nine, a child can open their own bank account, and by the time they start high school, they should understand the concept of long-term saving for a specific item they covet.

This helps to make the idea of saving less abstract. Teenagers experience peer pressure, wanting things their friends have. But the lesson to be learnt is whether or not they can afford what their friend has. And if they can’t, then they have to learn to wait until they can afford it.

Parents need to set strict money rules. If a child spends their pocket money within the first week of the month, do not grant them a loan. They should experience for themselves the consequences of being a spendthrift.

Keep teaching

As your kids grow older, explain new concepts to them such as borrowing, interest and investing, using real-life scenarios. For instance, if you go overseas, use this as an opportunity to teach your pre-teens and teenagers about the exchange rate and different currencies.

Living a financially smart life is something that should be inculcated from a young age, while at the same time we are never too old to change our own money habits.

Mandy Porter is a certified financial planner at Alexander Forbes.


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One of the most valuable lessons in life.

Teaching Financial Fitness to employee’s for 23 years, I have found the smart employees learned from their parents in most cases. HOWEVER, I have watched the 20 – 40 years old’s spoil the he** out of their children and I don’t think they know what’s coming. It’s not going to be good

And also teach them the value of wealth, how to preserve and grow it and not flaunt it.

Opening a savings account for your youngster 40 years ago was the in thing to do (no bank charges on savings accounts and capital gain through interest payments). Today however children are not so eager to open savings accounts at financial institutions as their saving gets eroded by greedy monthly account charges and withdrawal costs.

and that is just in ZAR. Add taxation and valuation in US$ and I reckon saving looks somewhat stupid. Investing (probably outside of SA) is more tricky but maybe the only way to actually increase your wealth.

Nice article. Food for thought.

But also teach them that the piece of paper is only a medium of exchange and its value depends on the governments ability to service their debt. The piece of paper should also be exchanged into real money, gold, at the earliest convenience, if saving is the objective.

“teach your children well”
“their father is going thru his own hell”

Good advice. However, why would you simply give a child money? Simply giving without a reason implies they can spend it any way they wish.
Ask a child why s/he needs money and see how they struggle to justify their needs.
If you can teach them how to BUDGET and the consequences of not doing this properly, they may learn something. Tough to do.

When they get to their teens, teach them the truth how the monetary system works, and how to invest wisely and in a fully diversified manner. The current system is controlling and archaic; it is being rapidly digitally altered to be more user-friendly, faster + cheaper. There will soon be other mainstream effective, completely digital ways to perform many of their functions!

Over the past 4 years our daughter and I together built online crypto & gold bullion businesses encapsulated in trusts. Today, at age 22, she will never have to work a day in her entire life.

End of comments.





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