Preparing our children for their financial futures…
Honestly, I have a deep dislike for going to any bank’s branch. No matter what, by appointment or not, you end up waiting and waiting and waiting…
During my last visit waiting – I did, however, discover a little gem I would like to share with you.
In this specific bank’s own marketing magazine, I found the following article…
“Parenting To-Do List:
- A-B-C = Done
- 1-2-3 = Done
- S-E-X = Done
- S-A-V-E …. oops!”
The article continues to go on to explain that in our Instant Gratification Society, we teach our children lessons for their age but overlook the most important lesson… which is to save!
I am sure we all at one stage or another wished that our little darlings came with a complete instruction and troubleshooting manual… but the same could be said about personal financial planning, or rather personally managing your own finances.
Not all of us had the privilege of watching and being a part of our parent’s discussion of drawing up their budgets and planning the month ahead – does the envelopes system ring a bell for you…? Although those individuals who had this experience in their childhood, then be better off than most of their counterparts.
Unfortunately, even fewer children these days have the privilege of being part of their parent’s monthly financial planning and management – for these children, their parents resemble the local ATM… push the right buttons and money will be distributed.
Further to this, the same Grandparents that did not make their children part of their monthly financial planning and management – are also at fault, for adding insult to injury. For as soon as the parents do decide to close a tap, these grandparents just open another one. Those Grandparents who did provide their children with the experience of monthly finance management are dumbstruck by the ‘easy-come-easy-go’ behaviour towards money.
Speaking out of personal experience, I have seen all three sides of the coin in our household. My other half was one of the privileged children, whose parents taught him the importance of monthly finance planning and management. And although my mother and step-father both work most of their lives in the banking industry, being part of their monthly planning and management was a BIG TABOO. Everything I know about finance was either self-taught or industry and qualification-related training, somewhere along the line.
Today I can see the difference in both our mothers and their attitude towards money and the ATM effect on our children. Where my mother would easily just give in to our oldest – now 13 – request for money for airtime or whatever he thinks is of life importance to a teenager, without consulting us if this will be acceptable or not. Hubby’s mother is rather much stricter and agrees with our pre-determined rules and limits.
For these reasons, I really appreciated this article, purely reaffirming the following guidelines when teaching our children about planning and managing their own financials.
Age 6 to 8:
- Start with the basics, as they can now count – they can start taking responsibility for an allowance to fulfil their needs. Providing them with the opportunity to pay for their own sweets, toys and whatnot – will bring them to the understanding of things cost money.
- Although I would recommend that this is started sooner. We have already started this process with our middle child, who is now 5 and is becoming quite a little entrepreneur with regard to ideas for earning and attaining more money.
Age 9 to 11:
- At this age, we should intensify the lessons, by teaching our children how to save to achieve their own goals.
- Opening a bank account with a bank card will increase their responsibility and independence.
- Further to this, teaching them to track their savings and spending habits will provide them with a solid foundation for their future financial endeavours.
Age 12 to 15:
- The negotiations years, when children should be able to grasp the concept of delayed gratification. We should trust them enough to make their own decisions when it comes to saving and spending.
- We can assist them by showing them how to research their option, find the best offering and determine if the amount spent on an item does measure up to the perceived value that item would hold for them personally.
- How to choose quality over quantity and not follow consumer fads.
Age 16 to 18:
- Building on the above-mentioned foundation, these teenagers will be financially responsible when they venture out on their own.
- Although I would recommend starting to teach them the basics of budgeting at an earlier age, at this age they should know how to budget and learn the high cost of debt of products such as personal loans, credit cards and clothing accounts
- They should by now realise the impact of their daily financial decisions, for the now and the future.
- Bring the understanding home to them of spending what you have is one thing, but creating debt to obtain something now is not as cool as it may seem; understanding the cost of debt and lending, the charges and interest banks and other financial institutions will charge on their debt.
- Pre-paid cards are the best way to instil the principles of sticking to a budget.
Age 18 to 25:
- Setting big goals for big dreams. Demand a greater financial responsibility for your children and start teaching them to invest not just save. Unit Trust accounts are a brilliant way to start this process.
- Should they be interested in saving or investing in big-ticket items, high-interest accounts should be considered.
- To warn them of longer-term loans accounts such as hire purchase, and lease agreements, the cost involved and the fundamental differences between such accounts
- F.Y.I. there is nothing wrong with coming to an agreement to match their savings at predetermined milestones to encourage their efforts.
I sincerely hope you find these guidelines as useful as we did to reaffirm what we are already teaching our boys to be financially independent adults.
For more information or assistance, feel free to contact me via the contact page in the menu above…
To your continued success,
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