John Lowe of MoneyDoctors.ie (and father of three children) gives invaluable advice on what you should be teaching your children when it comes to money – especially at the approach of the summer holidays.
It’s all about attitude
Think about how your parents’ approach to money influenced you. Now consider how your attitude will influence your own children. Everything you say or do in relation to money will have an effect: If you don’t discuss money in front of them, they won’t learn anything about it.
Whatever emotions you display, such as fear, worry, or even indifference, will colour their own relationship with money.
If you are mean with money or overly generous, if you never waste a cent, or if you spend like there’s no tomorrow – your children will be watching and learning.
It is important that you educate your children about personal finance. You need to teach them the key principles, including how to:
- save for a specific purpose
- stick to a budget
- choose competitive products
- spend money wisely
Obviously, you also need to teach them all about the risks associated with debt and introduce them to the basic financial products they are likely to encounter – explaining the advantages and disadvantages of each.
Clearly, what you don’t want to do is worry your children about money. Still, I believe there is a lot to be said for showing them where your income comes from, and what you then do with it.
Preparing the ground
Here are some tips on how to teach your children about money:
- Be consistent. Your children will respond better if what you teach them is consistent. It won’t be so helpful if you say one thing one day and something else the next.
- Before you start, it would be a good idea to work out your values regarding money are. In particular, think through subjects such as responsibility, family values and attitudes, decision-making, comparison shopping, setting goals and priorities, and managing money outside the home.
- Have a clear idea of what you think is important. If you want some suggestions, you may find it useful to have a brainstorming session with your partner.
- Guide and advise rather than direct and dictate. Encourage and praise rather than criticise or rebuke. Allow children to learn by mistakes and by successes.
- Explain to children what they can and can’t do and the consequences of breaking the rules you have set.
- Include children, as they get older, in discussions about money. Let them know that there are things you deny yourself because you can’t afford them. Children need to know that parents say ‘no’ to themselves, too.
J. Paul Getty summed it up when he said: “Money isn’t everything, but it sure keeps you in touch with your children” – was he right!
Every time money is earned, moved, spent, donated, borrowed, or saved presents an opportunity for you to teach your children something new. Better, by far, for them to learn by observation.