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Do you talk to your children about money?

By on November 26, 2018

Teaching money-management skills to children is climbing the popularity polls, as more secondary schools begin to include it in their curricula and the big banks dedicate numerous web pages to it. 

So whose responsibility is it to educate youth on matters of personal finance? A US study shows that parents believe both the education system and parents should share the task. But parents should be ready to be called on first, as 94% of students aged 16-22, in the same study, indicated that they are likely to turn to their parents as a financial information source. But don’t fret – it shouldn’t be a burden to bring your kids up to speed on the basics of money-management.
Research by the American National Endowment for Education has shown that as little as 10 hours of personal financial education positively affects students’ spending and saving habits. Implement a few simple techniques at home to make them more financially responsible.

Children’s weekly allowance is a good place to start.

Make them accountable for how it is spent. This is a particularly useful exercise to introduce the concept of money management to young children, starting from age seven to nine. While they may be too young to grasp credit 101 or basic investing techniques, they can do simple arithmetic to keep track of how their money is spent.Children can supplement this income by doing jobs you delegate to them in the home. Get creative! Rather than take out the garbage or mow the lawn, have them give their younger siblings tutoring in a specific subject. Get them to do something in your office or family business.

Most parents miss day-to-day opportunities to engage their children in conversations about money management.

A few obvious occasions to involve your children are in discussions about the family expenses, allowances, routine shopping, purchasing a new car or home, planning a vacation, and paying for college or university. While this may seem mundane, it gives them an opportunity to put things into perspective and relate to them.Teach teenagers to identify financial goals for themselves, create a budget, track expenses, and comparison shop.

Take the time to explain to them how different financial institutions and products work; for instance banks, insurance companies, mutual funds,  a current or savings account, retirement plans, stocks, bonds, credit cards, and savings bonds. Talk to your kids about their future job or business-ownership prospects. When they receive a monetary gift that is substantial,  go through what options they have in terms  of saving, investing, or giving to charity.

Do the above suggestions seem like more than ten hours of money management education? Spread over time, it will seem like a few minutes, nonetheless it is time well spent. Money management is not hard to learn but like most things, the best education starts at home.

A mantra you may want to start chanting in the home to your children is: “No one will ever look after your money with the same care or interest that you will.”

Who knows, they may be humming to the tune before they start university.

 

About Alisha Ma