Here’s What I Teach my Children about Money!

A Firstline Securities Limited Blog by: Garette Sealey

They say that “children are the future” and that “knowledge is power.”  If such is the case, then it goes without saying that in order to put my children in a position of power in the very near future, it is my job to teach them all about the value of money.

I have two boys: ages five and four, and teaching them that the “red one” (TT $1.00) and the “blue one” (TT $100.00) are different in worth, but are both very valuable, is quite a task.

The following is my two cents knowledge and insight which I try to pass on to my sons.  Hopefully you in turn share with your children!
Teaching Children Money-Saving Tips Through Open & Honest Communication

When my children were younger, I used to feel embarrassed to explain to them why I couldn’t purchase a brand-new game, toy, or whatever caught their interest at the time.  Within recent times however, I realise that I can use these situations as opportunities to teach.  Let me explain.  By being open and honest with my children about money, its worth, prioritising spend etc., I have been able to teach them instrumental financial lessons, such as the importance of saving.  I have even noticed that this communication has the potential to go a long way in preventing them from picking up poor financial habits in the future.

I also believe that one of the most crucial facets of parenting, and teaching children about money, is to keep them in the loop.  We constantly have unencumbered dialogues about a myriad of topics with our children: so why not include saving, investing and spending?  Put another way: talking about the trade-offs and compromises in spending choices can be much more powerful than simply saying “no”.

Impulsive Buying or Spending on a Whim should be Cautioned!

• The next time your child wants to buy – correction, wants you to buy – something such as new clothes or a toy, have them sit on the decision for a while. I would suggest instead of immediately buying it, simply buy time. If they still want it, then let them go ahead and buy it on their own, or make an effort to get it for them. The idea here is for the urge to change or pass.
• Many parents feel guilty about the lack of time spent with our children due to our hectic schedules; or we are comforted by the saying that I think most of us take out of perspective – and you can say it with me – “we want to give our children what we did not have!”  However, it occurred to me that it is precisely because I did not have certain things readily given to me that I am the man who I am today.  Be sure, or sure enough, that your child is ready to handle and appreciate the gift before it is given.
• Commit to a plan or vision for your family’s future and desist from having emotional, ‘reactive’ spending; this will only cause delays in making your vision a reality.

Strategies and Practices

• I use a glass jar as my sons’ piggy bank, so they have a visual of their efforts: this is to inspire them. I deposit a dollar or two extra and tell them it’s the “interest” for every ten dollars or “red ones” they save.
• Utilising their own savings for purchases of ‘the next best thing’ from their piggy banks usually acts as a deterrent when it’s time to withdraw.  The goal is to get them motivated to save and then challenge them to complete the transaction by analysing their wants and beliefs for a need which sometimes also changes.
• Assigning task(s), such as minor household duties, teaches my sons to develop discipline and a work ethic from a young age.

What to Remember When Teaching Children About Money

• Get started early. It always amazes me how much my sons understand at their tender ages. The sooner you can show them the value of money, the wiser their financial choices and habits will become.
• Set the example. Beyond mere curious mimicking, children look up to you and will adopt your habits.
• Help them with goals. Children can have trouble seeing the long-term payoff from the immediate sacrifice of not spending now. Help them visualise their goal(s) and get excited with them about meeting it.
• Raise the bar gradually. Don’t expect your children to be financial geniuses from day one, start with small goals that pay off within a day or a week before building up to bigger savings.
• Make savings and investing fun.

CLOSING THOUGHTS……FOR US PARENTS

Earning an honest dollar a day takes willingness and hard work; saving 0.50 cents from that dollar requires sacrifice and discipline; and investing the savings requires patience and knowledge. Every day is an opportunity to learn something new. I know situations differ and what works for one may not work for another, but I urge you to analyse your situation from the perspective of “want” and “need” and for the persons undecided, “what’s in between”.  If you’re thinking to yourself “I live cheque to cheque with nothing to cut back” I say to you then: bank the experience and the knowledge for use in the future!

Firstline will still be here when the time comes!

That said, my main takeaway is that getting your children started early is one of the best decisions you can make for them, and you should keep teaching as long as possible (even when it may appear as though they’re not listening). Remember we are the adults and parenting is our career!

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