I believe that you are never too young to learn how to wisely manage your money.
Just imagine if this was a compulsory subject taught in grade school would the global financial crisis have been less severe if not altogether avoided?
That wasn’t a rhetorical question, folks.
Instead, what we have in our education system is the mantra that is continuously drilled into our heads that we should knuckle down, study hard and get good grades so that we can find ourselves secure jobs that see us to retirement.
Anybody notice what is wrong with the previous statement?
For one thing, the employment landscape has changed so much in the last 25 years that if you are 22 years old and reading this, you will very possibly be on to your third job before you reach 30.
The pace at which technology is changing and the rate business models are evolving means that you may want to revise your thoughts on having only one job for life.
So, back to the topic at hand; as parents how do you model to your kids on the issue of money. This means that what you say, and do with the money you earn will to a large degree determine how your children deal with their own hard earned when they are old enough to do so.
Here are some tips to get them on the right track
1. The 70:20:10 Rule
Disciplined saving of 30 cents into the piggy bank for every dollar that they get as pocket money or for the older kids what they make on paper rounds etc.
Explain to them that they are allowed to spend 70 cents on anything they want but 20 cents has to go into the bank.
Kids will ask why and the answer is that it is seed money that they will lend the bank and the good thing is that the bank has to pay them extra (interest) for borrowing their money. This is empowering for your child to know that they are doing the banks a favour, not the other way around.
2. Tithing: the other 10 cents
This 10 cents teaches your child the idea of giving to charitable causes and creates generosity of spirit. One great way is to discuss with your kids that by tithing they can help people less fortunate then themselves and it makes for a better community when everybody pitches in. It is a fantastic way to build your child’s self esteem.
3. Delayed gratification
We all want it NOW!
Advertisers know how to push all the right buttons but as we have seen, there are a lot of under 25’s who are declared bankrupts from using the instant credit offered by retailers for the latest gadgets only to find that they cannot repay the debt.
Personally I think that having a bad credit rating is as bad as having STD; no one will want to do business with you and even worse when you realise that you had the chance to buy into a great business but cannot get finance to do so.
If your child desperately wants something now, and has the money saved ask them to sleep on it for 2 whole days before they go to the store to get it.
It is not being cruel to your child, but getting them to think about their wants versus their needs.
Above all, have open and honest communication with them about money-it’s not a dirty word.
Yours in health, wealth and happiness