In order to have a good long-term relationship with money, there are few key understandings kids should have before they reach adulthood.
“Finance is a big part of an adult’s world but it is not given the attention it deserves during childhood,” says Eunice Sibiya, head of consumer education at FNB.
The influencers for children will be the adults in their lives, so this Youth Month, take extra care to not only teach, but also demonstrate good money habits.
Emotion and money don’t mix
Learning to detach emotions from money will help your children make good decisions.
There is nothing like the rush of getting the first pay cheque, receiving a bonus or buying something that you really want. There is also stress, anguish and sleepless nights when you don’t have enough income to cover your bills.
“Many of the big financial pitfalls are when people spend money based on emotions rather than logic,” says Sibiya. “Unfortunately this is a very real problem for adults, so if you can teach your child to really understand why they need to purchase something, rather than doing so without thinking it through; it will go a long way to helping them in the future.”
The value of money
“Until your child earns their first salary, or even beyond that, money is usually an abstract concept,” says Sibiya. “Buying a new pair of shoes has no bearing on the food that they are eating or the school they attend.”
In order to make money a reality in their lives, you will need to teach your child the value of money.
“Discuss what they want to have, whether it is clothing, a toy or even airtime,” says Sibiya. “Use that in relation to something you use as a family every day, such as milk or bread. If they want a R50 item, discuss how many loaves of bread that could be. You can even put something like their school fees in context by making them work out how many loaves of bread it would take to pay.”
They are in control
When your child reaches adulthood they will need to understand that they are the only ones in control of their finances.
“The concept that you control money and not the other way around is difficult for even adults to sometimes understand,” says Sibiya. “The most important aspect of this is that every financial decision, even seemingly small and insignificant, has an impact on your money.”
The control exerted over finances will determine if they have a solid savings plan or are swimming in debt.
“All parents want the best for their children, so giving them the skills to control their finances is a lesson that will help them throughout their lives,” concludes Sibiya.