The best way that parents can pass on good financial habits to their children is to be in good financial habits themselves. Children pick things up from their parents by osmosis. If a child grows up in a family where finances are a drama because money keeps running out, the chances are that they will continue that financial roller coaster ride into adulthood.
If they experience a childhood in which energy does not get wasted on day-to-day financial transactions because everything just flows, this ease and flow is likely to be reflected in their own finances later on. It’s a paradox that people in financial difficulties spend more time and energy on money than those whose finances are sorted. If you have money worries, you are constantly trying to balance the books, which does not leave a lot of time for much else. If you have mastered your money, your energy is spent on the fruits of that mastery – the treats, the shiny new stuff and the trips away that make life living.
The example we set our children in all areas is the life we are teaching them to lead. If our relationship with money is a harmonious one, financial harmony will be come easily to our offspring. Of course, financial harmony is not second nature to everyone. Like anything in life, though, it can be learned. And, knowing what is at stake, the motivation to achieve money mastery is that much greater as a parent.
If money has never been your strength, therefore, and you would like to avoid your children following suit, there are a few simple steps you can follow to improve your money management skills and to set an example for your children to emulate. On a day-to-day basis, spend cash rather than using debit or credit cards. The use of cash will help you to distinguish between needs and wants. Build up an ongoing $1k buffer in your account so that if an unexpected cost takes you by surprise, it won’t be a drama.
When it comes to ‘wants’, such as holidays, save up for these, rather than buying them on credit. Talk to your children about your savings plans and asking them what they would like to save up for. Pay them regular pocket money – a gold coin each week is all it takes to bring their money management skills to life. Empty out their money boxes with them, count their savings and tell them how well they are doing.
If they do end up splurging their hard-earned savings, it’s not the end of the world. Experiencing buyer’s remorse as a child can be a powerful incentive to change your ways from an early age. By setting a good example, encouraging them in their endeavours and engaging with them on their financial journey, your children’s prosperous financial future will take on an unstoppable momentum all of its own.