WEALTH on WIRE

How, and when to communicate money values to children is, however, one of the toughest challenges that parents face.

Educating, motivating, and empowering children to become regular savers and investors will enable them to keep more of the money they earn and do more with the money they spend.

So many parents do not discuss finances within the family either because it’s considered inappropriate, or personal. Consider this: if you don’t actively provide the correct information to your child, how is he/ she to know, understand and inculcate your values?

Therefore, as soon as your child can count, introduce him/ her to money. Observation and repetition are two important ways in which children learn.
As they grow older, have frank discussions about how to save it, how to make it grow, and how to spend it wisely.

If they can differentiate between need-to-have and nice-to-have, then they’re halfway to a solid and secure future.

Better still, help your child set his/ her own goals. If it’s a toy that they must have, then regard this as a good opportunity to teach your child how to be responsible with money, and prioritize between what they want, and mindless spending.

Allow your child to make spending decisions, which means that they will learn from the choices they make.

And learn that it’s to their advantage to do a little homework before buying, waiting for the right time to buy, and actually deciding if the product selected is what they really want.

Begin simply, as your parents might have done, with a piggy bank. If you do give your child an allowance, get them to set aside a small portion of it every time.

Explain and demonstrate the concept of earning interest income on savings. Incentives it; offer to match what your child saves on his/ her own.

To make it easy, use 12 envelopes, 1 for each month, with a larger envelope to hold all the envelopes for the year.

Encourage your child to save receipts from all purchases in the envelopes and keep notes on what he/ she does with his/ her money.

Learning by observing and doing is the most powerful tool. Such as when you go grocery shopping, and can use the opportunity to showcase planned spending, or how to recognize value for money.

Or if you decide to use a credit card at a restaurant, you could show your child how a credit card works, when it can be used, and how to calculate a tip!

Finally, your child needs to understand that spending money can be fun and very productive when spending is well-planned, and that a penny saved is, indeed, a penny earned!