Talk about money
Talking about money in a calm, relaxed way and making use of everyday opportunities to demonstrate healthy financial habits is vitally important. From a young age, children witness how their parents interact with money.
Pay cash, not card
One way of demonstrating that money has value is to pay with cash when your children are around. Paying with a credit card sends the message that anything is available just by swiping a magic piece of plastic. Have a conversation about items which you consider essential versus luxury, just-for-fun items. Explain that it is not good to spend more money than you earn and that if you want something, you need to save for it.
Teach financial restraint by not giving into your child’s every wish.
Allowances provide practice for money management
One of the best tools is pocket money, or an allowance. Experts differ on the age at which this can start, but it is generally accepted that six is good.
Start off with a weekly allowance for young kids and increase this to a monthly allowance for teenagers so they can be challenged to make their money last.
Tie the granting of an allowance into basic household chores, so your child understands you have to work for money, it does not simply get handed out.
Talk to your children about what types of expenses you cover – electricity, food, house and car – and explain how they might spend their own personal allowance.
Porter is a certified financial planner at Alexander Forbes
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