When it comes to being a father, teaching your children about the facts of life, or other slightly embarrassing subjects, is often something we would rather leave to Mum. Often men are more comfortable teaching the kids about things like how to chop up firewood, or mow the lawn. It is no surprise then that when I was asked to teach the kids about money and finance I was right up for the challenge.
“This will be easy”, I thought. Then I stopped and began thinking about what I would actually teach them. What angle should I take? Was it too early to warn them of the dangers of sub-prime mortgages or should I keep things simple?
I got to work after some serious thinking. The lessons seem to be going well if I may say so myself, and I figured that for other fathers about to embark on the journey of economic discovery with their offspring I would lay out some of what I felt should be taught.
I don’t think it is ever too early to start teaching your children some sort of financial responsibility. Even if it is as basic as teaching them to respect their toys as they cost money and cannot be easily replaced. As soon as a child learns to count you can begin giving them very basic ideas about adding and taking away.
One thing I always did when my children were younger was to let them give money to the cashier whenever we went to the shops. I was trying to impress upon them that we actually had to pay for what we had in our trolley and that it wasn’t given to us for free.
The Value Of Pocket Money
It is very hard to teach children the value of money without giving them some of their own. Having pocket money will give the child a sense of being grown up, and will normally spark an interest in money. The amount you give doesn’t have to be huge. In fact a small nominal fee is just fine.
You are not giving your children this money so they can save up for their first house, but rather so that they begin to understand the principles of budgeting. Once you decide on an amount to give your child each week you should stick to it as much as possible. The idea is that if there are any small toys or gifts they want to buy, they are to pay for them with their own pocket money.
If they do not have enough money for a particular item then do not give into the temptation to pay for the rest, as it will defeat the whole point of the exercise. Instead, show them that they are a little short and if they put next weeks pocket money towards it they will be able to buy it.
Even if the child protests (and they probably will), you must stay strong. Giving in and handing them the extra cash renders this whole lesson meaningless.
Get Them A Bank Account
My kids loved it when we got them their first bank account. They loved getting the letters through the mail giving them their balance and it did give them a real sense of having control of their money. The power of seeing numbers on paper is amazing, and as they begin to see the numbers increasing it is great to see how much more motivated they are to save rather than spend.
There are many good bank accounts for children available, and many come with fun account books, and other bits and bobs that will appeal to the little ones. As they begin to get a little older this also gives you the chance to introduce some early teachings about interest rates.
Give Them The Chance To Earn More
Something that is very important to teach early on is that you have to earn your money rather than just expecting it to be handed for you. A good way of teaching this is to give your children the chance to earn money on top of what you give them each week in pocket money.
Give them “wages” for helping out with general household chores such as hoovering, or cleaning the car. This should imprint the idea of earning money into their heads, as well as meaning less work for you around the house! Yippee!
As your children becomes older, suggest some sort of basic weekend job. Something like delivering papers, or sweeping the floors in a salon is always a good place to start and will give them much more financial freedom.
If you are lucky enough to have a child that seems to show some sort of entrepreneurial interest then you should encourage it. Listen to any ideas they have about making money and take an interest, no matter how wild or outlandish the idea may be.
Involve Them In The Household Bills
As they reach teenage years, it can be a good time to start introducing them to the cost of running a house. Make them aware that every time they go to the toilet or have a bath it costs money. Get them into the habit of switching lights off, and turning taps off when they are finished.
Again this has the dual effect of giving them an important lesson in finance, as well as helping you keep household bills down. Something I like the idea of is giving my children fines if they leave the lights on etc. I feel it will again imprint the importance of being financially aware. Something to try out perhaps?
There are many different ways to teach your children about money and although nobody can guarantee their children will be financially responsible all their lives, we owe it to them to give them the best possible start.
This is a guest post from Timothy Ng, who lives, breathes, and sleeps personal finance! Check out his in-depth guide to credit card comparison where he answers everything you need to know before applying for a credit card.
Btw, there's a pretty nifty tool that motivates your kids to do chores. It's called MyJobChart.com. With a free account, they can earn points for finishing jobs you assign them, good towards free merchandise. Give it a try. It's completely free!