When working with clients, I start out by asking the following question:
“Who have you learnt the most on managing money from?”
I was completely wrong.
The answers were actually really close to home. Usually it was a parent, sibling or grandparent. Someone within the first two tiers of your family tree.
Putting this in perspective, it is very clear that most of our behaviours and habits towards money come from those that are closest to us.
So as parents or family members, we underestimate our role in how much children pick up not only from behaviours and traits but perceptions around money.
It is not uncommon for me to work with a client with a significant amount of personal debt and when digging deeper into their family history, there is usually a personal story of parents mismanaging money. Poor decisions, bankruptcies, never able to break free of the debt cycle.
We can not underestimate our role in mentoring the next generation and the impact we have around them when it comes to managing finances.
As a family member, below are some strategies when it comes to money:
Ask the question, “How am I managing my own money?”
Self reflection is a wonderful thing. Children learn from watching what you do.
Do you have a value set around specific expenses? If you want to spontaneously purchase something, what process do you go through to justify the expense? Or do you just wave your credit card and items materialise? Is it something you really need and will you get value out of it? How does it fit into your weekly budget? We have spoken extensively about asking these questions here, here and here.
Monkey see, monkey do. Most of your behaviour traits are a product of your parents. Therefore, the greatest thing we can do to help the next generation coming through is to put personal accountabilities on our own money today.
Put value on pocket money for children
Effort & reward are wonderful things. “Do this” and you will “get this”. This instills a value set in children that money doesn’t drop out of the sky. This can be built into chores or daily responsibilities in a structured fashion. Document this and build a system around it. Place it on the fridge and get them to tick this off on a daily fashion. Small incremental actions snowball into large gains over time.
Ensure there is a plan for the money also. Ask the question, “When you get the money, what are you going to do with it?” It doesn’t matter what they do with it but ensure they have a plan. If they are young, get them to draw a picture of what they want or cut out photos from catalogues or magazines. This will give them something to focus the mind on. Arbitrary saving rarely works. A better approach is to have a plan for the money.
A physical trip to the bank to deposit the money works really well. This becomes a special “event” or ritual which makes the saving process even more tangible and real. Money is exchanged and a deposit slip is received. Real physical experiences in a world of invisible money ensures kids see the tangible, tactile side of their efforts.
For more great information about kids & saving, visit this Money Smart website here.
By getting these behaviour traits in as young as possible, the thought process will be hard wired into the brain and will be second nature. Start as young as you can. By teaching your children to have a healthy respect and understanding of how money works, you are providing them with a basic life skill that can set them up for success.
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