Teaching your children to understand the fundamentals of money is critical to preparing them for success in the real world. As the old saying goes, money does make the world go round. So regardless of ambitions or social position, money will play a significant role in our lives every day. The financial habits they build from a young age will shape their future. This is a daunting task, no doubt. You’re probably wondering: “When do I start?”, “Where do I start?”, “How do I start?”, “What do I teach them?”. But don’t fret, we as Sticitt are here to help.
It’s never too early
Children absorb more than we might realise. They notice what you do with money from an incredibly young age. So the sooner you start the conversion the better. Rather teach them the right principles from the start than wait till they learn the wrong ones and try to adjust them later. So don’t avoid or brush off their questions about money. Rather take some time to explain and answer their questions as soon as they start arising. They might not even remember it, but the understanding they will develop from it is invaluable.
Back to basics
Financial literacy doesn’t have to be complicated. Research has shown that merely by doing the basics well and doing them consistently, individuals are significantly more likely to be financially successful. Consistency trumps complexity because every financial decision compounds over time. So before trying to teach your children anything you struggle to understand yourself, rather spend more time embedding the basics: don’t spend more than you have, track and plan your money, and avoid debt as far as possible. These basics form the foundation of their success, so the more you can reinforce them the more stable your children’s future will be.
Form strong habits
When teaching your children financial literacy, it is crucial to make it part of their normal routine and not simply do it once off. Lessons are often learned fast but forgotten even faster, but habits tend to remain long after the lessons have passed. Make financial literacy part of their normal routine, part of how they plan their pocket money or tuckshop money to embed the lessons into their lives permanently.
Where the money comes from
“Money doesn’t grow on trees” my parents used to always say, but they never seemed to follow up with explaining where it does come from. Money isn’t as hard to make as it might seem, not if you apply yourself and look for opportunities. Encouraging your children to find usual tasks they can do around the house or identifying business opportunities teaches them a positive money mindset that will serve them well throughout their lives.
Take the first step
There is no better time to start than right now, so to help you get started we’ve compiled some easy steps that you can start with right now:
- Set and enforce a budget: Encourage them to start planning and managing their money by setting and sticking to a fixed amount they may get every week. As long as they can always get more, they’ll never learn to manage their money.
- Separate their money from yours: Don’t give your children access to their wallets or cards. Rather let them manage their account (or Sticitt Wallet) so that they can track and take ownership of the money they have.
- Start a discussion: Talk to them about money. Encourage them to ask questions and open it for discussion. Make them aware of the importance of money by making it part of their normal dialogue.