Preparing your children for their financial future is one of the greatest gifts you can give them. For many parents, talking about money can be an uncomfortable subject and discussing finances with your children can feel both personal and scary, but they need to learn if they are to make wise decisions concerning their own finances.
It’s best to start teaching these lessons early on in life, if you think about teaching manners or language, it would be near impossible to start teaching these fundamentals in their teens.
SET SAVINGS GOALS
A good way to start is with goal-based savings – liquid cash doesn’t mean as much to a child as, say, a new Barbie or Hot Wheels. It is also important because later in life they will understand that it is easier to save and invest if you have a goal to work towards.
VALUE OF EARNING
You have to teach them the value of work. Earning money doesn’t just happen, you have to make it happen. Whether you are granting them a gold star on a chart for doing their chores or putting R5 into their piggy bank for washing your car – the same concept of gratification applies.
SET REWARD TIERS
Reward tiers also help, so that they can decide if they want to cash-in now or save up for a bigger reward – it’s this kind of reasoning that will help them later on.
If you can convince your child, once they hit their teens and are wanting the latest gadgets, that it’s better to invest R10 000 rather than having the new iPhone then you know they are on the right track. The value of that phone will have diminished significantly over a couple of years, but that sort of investment over a decade or two can make a big difference.
It also comes down to values. By having a goal that they are working towards you are teaching them that it isn’t the money that they are working for, it’s the end-goal. It’s not about being rich, it’s about the lifestyle that we’d like to have.
Need to review your financial goals? Let’s get in touch.