Giving kids an early start in learning to make ends meet
With official interest rates set to rise and the costly festive season looming large on the horizon there’s no doubt Australian’s budgeting skills will be put to the test over the next few months.
Financial skills are incredibly valuable but it’s often not until you get older that you begin to appreciate the small lessons about saving and spending your parents may have taught you when you were a kid.
Growing up on a farm meant my Mum and Dad generally made the most of having me and my two siblings around during school holidays to do the jobs that needed to be done. Often we were given the opportunity to make some cash carting hay or working in the wool sheds.
Learning to manage this small amount of financial freedom was good practice. We enjoyed watching our piggy banks grow heavy and looked forward to spending our earnings. The items we bought with our own money were always the ones we valued the most.
These school holidays many kids will be exercising the same entrepreneurial skills, selling produce from their parents’ backyard, offering to mow a neighbour’s lawn, washing cars or walking the dog. Helping your kids make decisions about how to spend these earnings is a valuable opportunity to set them up for the future.
Money was something we talked about at the dinner table when we were growing up. Life on the farm meant that from an early age we were exposed to discussion about commodity prices, currency, interest rates and how that impacted on the day to day running of the farm, its viability and exposure.
Admittedly, if you’re not on the land, the price of wool might not be relevant but being open with your kids about credit and debt, budgeting to cover the mortgage, groceries, school fees or bills will provide them with valuable insight.
If your kids are earning money use the opportunity to help them draw up a small budget and set achievable savings goals. Work with them to write a wish list and encourage them to set short term goals, such as saving to buy a book, CD or computer game and long term goals, such as saving to buy an iPod or coveted item of designer clothing. Suggest they open a savings account and put aside a portion, say 10%, of what they earn for the future.
Some kids these days could be forgiven for assuming ATMs provide a never ending supply of money or swiping a piece of plastic at the supermarket allows you to buy all you want. Keeping an open dialogue with your kids about how you manage your money can help correct these misconceptions.
Take your kids with you when you go to the supermarket and explain how you make decisions about what to buy. If it’s a simple purchase, give your kids the money to pay and encourage them to make sure they receive the right amount of change.
Providing children with pocket money is one of the most popular and widely debated topics in online parenting blogs. Questions like how much and how young are often discussed with vigour. The truth is for every family, the answers will be different but the key to handing out a weekly allowance responsibly is to put some value on it. Offer pocket money in return for doing small jobs around the house such as sweeping the floor, keeping their bedroom tidy or laying the table for dinner.
After working in the banking industry for many years, I’ve come to realise the money habits you develop as a kid can have significant influence on the way you manage your finances in later life, helping you to successfully navigate the lean times and make the most of the good.
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