How to Teach Your Children to Manage Money

Teach Your Children to Manage Money

It is a sad fact but many people retire to stay poor. After working for an amazing forty years and at the same time earning hundreds of thousands of pounds many have very little to show for it. What happened to everything? Well, most of you would just get on your toes. Why? Well, schools have the ability to teach us many different subjects including math, but the one thing they don't teach is having personal money and how money can work for you instead of working for money. So where can our children learn about personal finances? Well, it is up to us as parents to teach them. The problem is that most adults are not very good at looking after money, and because we have not been shown how to look at it in our youth. Let's face it - most families do not have the money to talk about between parents and children. Now I do not suggest that we start to show residential and bank statements as some parents, especially young people and teenagers, may find it embarrassing to admit their financial status. All we can do is advise our children about the dangers they expect in later life. Draw on your life experience and partnerships with banks and other financial institutions. The fact that from time to time in our lives things will happen that will affect our personal finances. Some things will be beyond our control not to do for ourselves, but there will be times when choices have been made “that seemed like a good idea at the time”. We’ve all been there, done that, only to pay the price in the end. So, how and when do we start? As young as possible, usually by the time a child is about 3 years old, he already knows about pens and pounds and understands the concept of giving them away for shopping. Give them enough cents to get the lollipop they want at the candy store. Here are some tips and tricks to help your children get started on the right path to financial prosperity. * Buy a piggy bank for your little ones. Let them choose any color or size they want. Invite them to deposit their cents in their piggy bank. Sometimes they may count their pennies and reward themselves if they want to. * Once they have proven themselves capable of managing their cents, take them to open their bank accounts. Many large banks on highways and construction organizations have special savings accounts for children. Depending on their age group, they may be given some incentives e.g. fun packs, cash vouchers CDs, DVDs, computer games, etc. * Many children think, "money grows on trees". Let them know that YOU are working to bring in this paper and metal called money. Whether you are working or not or if you have acquired considerable wealth, do not encourage laziness in your child. I am sure there are plenty of household chores, dishwashers, room cleaning, etc. Give your children money but let them work for it. They also need to be able to work for free sometimes to learn the value of hard work. * Many relatives these days usually donate money for birthdays and Christmas especially for those over 10 years old. Over the years, their interests have been constantly changing (what a 12-year-old and a 60-year-old see, the "inside thing" is often very different!) Encourage them to save 10% of their cash prizes. If they are older and have paper or something similar, encourage them to save 10% of their income. This may be a small amount of money but it is a good practice to get into it. If you read this now, as a middle-aged parent, imagine how much money you would have in a bank today if you had saved 10% of everything you ever earned. Scary stuff! * Managing money does not mean saving and locking it out permanently. It simply means being aware of it, of spending money wisely, and of having the habit of saving. Teach your children that giving to money is important. This could be at a local hospice, homeless shelter, or a charity of their choice. This would help them to be more rounded, more respectful of others regardless of the situation and more appreciative of their lives and prosperity. They will learn that money comes back to you in more ways than you can imagine. * Encourage your child to buy a journal or diary where they can record their dreams and aspirations. This allows them to dream more and look forward to their lives full of prosperity. There is nothing wrong with accumulating wealth in order to achieve these goals. Money is not evil! * “Unclean money” and “Money is the root of all evil” are words that you often hear people say. Ignore them. Money really brings the best in the world. Creating wealth helps create jobs for others. Investing in a business helps to bring solutions to people's lives in the form of new products and services. Earning large sums of money allows you to donate more money to a charity - or start your own trust fund. So, as you can see money is not good and it is not bad - it is what you do with it that makes the difference. * One of the oldest principles of wealth creation is, "It takes money to make money". Unfortunately, it also takes money to lose money. Teach your children the importance of caution when getting into financial matters. Remember the gold rule of any very risky business. Only invest what you can afford. Additionally, let them know that most of the millionaires they have built for themselves have started out empty-handed. * Debt is one of the major social ills of our time. The price to pay for the philosophy of “have it now, pay later” is sure to pay later. Unfortunately, some banks on the highways have contributed to this philosophy. My bank has posters at the branch saying “why wait, get it now!” Debt binds you to a job you do not like, creates stress and anxiety in your life, and undermines your ability to create wealth.