Most people want their children to
grow up with good financial habits. As a parent, you teach your kids that money
doesn’t grow on trees.
You teach them to save and to
manage their pocket money well. But children learn by watching – are you
inadvertently contradicting your well-intentioned advice to them by setting a
bad example?
You’re not in control of your
monthly budget. Not planning your expenses properly each month may result in you buying
luxuries at the start of the month, and then not having enough money for
necessities – such as paying for your kids’ promised school trip – at the end
of the month.
This type of spending pattern may become ingrained in your
children’s own lives as they get older.
You don’t talk openly about
money. You
don’t need to go into details, such as what you earn, but kids need to learn
how you as a family handle your finances. Is it about having the nicest things
possible, or is it also about putting money away for a rainy day? If you and
your spouse have different spending habits, it’s important that you both
compromise and agree on a budget for certain things.
Besides causing
relationship strain, hiding expenditures from your spouse – such as those
expensive new shoes you bought – sets a very bad example to your kids.
You don’t save any money. Setting an example here is
difficult, since your children may not be able to see you actually saving
money. However, it is a good idea to tell them that you are doing it, and why –
for example, the beach holiday you’re all going to have at the end of the year.
Encourage them to save from an early age – 5 is not too young – by giving them
small amounts that they need to save for short periods.
For further motivation,
you can agree to match whatever they save.
You use credit cards
irresponsibly. Kids today often think that money comes out of the plastic cards you carry in
your purse. Explain the difference between a debit and a credit card, as well
as the difference between the interest you earn, and the interest you pay.
It’s
a good idea to pay with cash in your kids’ presence now and again.
You are inconsistent in
saying ‘no’ to demands. When out shopping, it is easy to give in to the demands of wailing children at
the check-out counter. Encourage them to use their own pocket money or savings
for items they want.
You confuse wants with needs. Your kids should learn that
we can’t have everything we want in life, and that each family’s financial
situation is different. Parents often want to give their kids everything they
never had as children, but this results in a lack of understanding of the value
of money.
Kids need to learn to compromise, and that they can only have what
the family can afford.
You try and outdo other
parents. Kids don’t need to have the most expensive birthday party, matric dance dress,
or extra-mural activities. For example, you don’t need to throw the most lavish
party in your neighbourhood for your kids to have fun. Based on your budget,
you can give them choices – would they prefer a jumping castle or a clown?
They
need to distinguish what is important in life – it is about having fun with
their friends, not spending the most money.
“Teaching your children good money habits starts with you. What you do is just as, if not more important than what you say to your kids. Your example could form the basis of life-long habits – so make sure you ‘walk the talk’ in your own financial habits on a daily basis,” Van Heerde concludes.