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Why teaching your children responsible finance is important

May 4th, 2017 Posted in kids and money, learning about money
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There will come a time when you will sit your children down and tell them how the world works. You care deeply about them, so you’ll teach them how to take care of themselves financially. You may have gone through points in your life when you have had to be frugal and times when you have invested. To set them up with the best knowledge, advice and respect for money, you will need a little help.

Why teaching your children responsible finance is important- kids using a laptop image

Image – StartupStockPhotos

Teach them, don’t lecture them.

Start them off young. You may find lecturing your children how to be responsible with money and taking care how they use it, might be a fruitless exercise. But there are dedicated routes you can put them on, where information in fun bite-sized portions can instil in them the values you want. Millennials by the age of 15 are beginning to understand how the economy works. Instead of sitting them down for a long talk about ‘pennies make the dollars’, give them something they can digest in their own time. Books on avoiding debt and having self-restraint can be a gift on a holiday or for their birthday. Don’t force it down their throats, they are, after all, going through a rebellion period at this age.

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Give them responsibility

Don’t patronise your children, the youngsters today aren’t what they used to be. Technology is at their fingertips, and most kids understand it; more than you might think. Take them with you to the bank, and set up a bank account in their name. Bring them through the process and let them ask you and the branch’s financial advisor questions. Another excellent strategy to get children interested in learning about finance is to go their school and request a fun segment with books, theatre and art on money, be incorporated into their everyday learning.

Why teaching your children responsible finance is important - renovating a property image

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A family project in renovating

For the keen, sharp-eyed investors, a property is there to be bought and sold. For the young entrepreneur, the property can be their very first business venture. Buying houses or apartments to renovate then sell, is a fantastic way for teenagers to become their own boss. As a parent or young entrepreneur, working with people you can trust such as family is crucial in taking the first step in the world of risk and reward. Buying an old house with your pooled resources and renovating the property into a modern family or professionals’ home, is a great route. When buying the materials you intend to use, look for deals, buy in bulk and plan out your budget and purchasing schedule. You will most likely be doing the renovating yourselves, so take the time to research the methods of professional builders to avoid time-consuming mistakes. When done correctly, your prudential real estate will be a hot potato, ready to be scooped up by many professionals.

Why teaching your children responsible finance is important - house for sale image

Credit – Mark Moz

Selling your hard work

Property development can be a lucrative business. It not only stirs one’s creative juices but also requires the developer to do the research that will make their property incredibly attractive to the market. When it finally comes to selling your investment, auctioning your property to the highest bidder, rather than a fixed price set by a surveyor could give you more than you expected. You’re on shaky ground at this point, because different estate agents will quote you different prices. Go online and find a company with a track record that surpasses the competition, and will fight for you and sell your hard work for the absolute maximum.

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Early Learning: How to Teach Important Business Concepts to Your Child

January 3rd, 2017 Posted in financial education, kids and money, learning about money
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It can be difficult trying to teach our children how business works, but it’s a necessary eye-opening experience that your child needs to understand. It will help them make decisions in the future, and they’ll learn to appreciate how the economy works which can be a great boon to their learning ability in the future.

Here are some of the most important concepts to teach your child, and examples of fun activities to help them understand it. These shouldn’t be aimed at children who are too young. Ideally, you’ll want your child to have a basic understand of maths first because there are a lot of numbers involved in business. You also want to have a couple of toys or video games laying around to use as “products” to demonstrate these concepts.

You’ll also need some sticky labels (that can easily be removed) and a pencil, better yet some colored pencils and paper to write things down.

How to teach business concepts to your child - young girl studying image

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Supply and Demand

To teach your child this simple concept, bring out a bunch of their favourite toys or video games and grab a couple they don’t use anymore or don’t want. Set them out like a shop, and then give your child some fake money (such as monopoly money) and offer them to your child. Set a price for each one, making sure that your child’s favourite toys are more expensive, then offer to “sell” them back to your child.

To teach them supply and demand, tell your child that their favourite toy is in high demand and that the price has increased from what the label says. Then, tell them that their other toys are cheaper because they aren’t in demand. They’ll start to understand that products that are highly sought after will cost more because they are in demand, but because there isn’t much demand for their other toys, your child can “buy” them back from you for a cheaper price.

Trading

You can teach your child to learn forex trading which will give them an insight into the trading industry and also how foreign currencies interact with home currencies. A simple way to do this is to use online programs and trial accounts. If those programs are too advanced for your child, then a simpler method is to set out a bunch of toys or games that they like to play, much like the supply and demand example. Play a simple game of trading with them. The objective is to tie in supply and demand with the toys that you have set out.

Give your child a couple of toys and set values on them. Next, tell your child which toys are in high demand (use your imagination here!) and give them reasons. For example, perhaps the latest Pokemon game came out and, as a result, Pokemon toys that your child owns have gone “up” in value, so they can be sold back to you for more money because they are now high in demand. Teach them to read how the market is going so they can buy and sell products to gain profits.

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Setting A Good Example When It Comes To Finances

November 21st, 2016 Posted in kids and money, teaching children about money, Uncategorized
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Taking care of your finances is one of the most important things you’ll ever do. Being lackadaisical with the money that you have will only leave you in sticky situations, such as in debt or worse, bankrupt. Another crucial thing to think about, is how your family handle their finances. You can tell your kids all you like about how to save money or becoming financially smart, but at the end of the day, they are going to learn from what you do. Kids will always pay more attention to what you do, rather than what you say. You must set a good example when it comes to your finances. Here’s how to do it.

Start Early

Starting as early as possible ensures your kids develop the right attitude towards money is important. You can do this by making sure you use your money responsibly. It’s no use starting when they are teenagers, as they pick a lot of it up when they are very young.

handful of money image http://thefinancialfairytales.com

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When You Do Talk About Money, Know How To Talk About It Properly

When you talk to your kids about money, make sure you know how to talk about it properly. You should be open with them about what you’re doing with your money, and give them advice on what to do with theirs when they have it. Speaking to them about it like adults is important. Try not to discuss money in a negative way, as many people do. Although money isn’t everything, a positive attitude towards money will help them later on in life.

Give Them Pocket Money And Encourage Them To Save/Spend Wisely

Give your kids a set amount of pocket money and encourage them to save and spend wisely. Make sure you encourage them to develop a savings habit early on. When they want to buy something, let them work out how much it will cost and whether it’s worth it.

Live Below Your Means

So many people spend more than they earn and end up in debt. It’s up to you to show your family how to manage their finances by living below your means. This means spending less than you actually earn, in short.

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Plan Your Purchases
Planning your purchases rather than buying on impulse sets a really good example to your family. You should know you’re going to buy something a few weeks in advance so you can adjust your finances accordingly. Never buy something without mulling it over properly first, as the novelty can quickly wear off and you end up being a consumer for the sake of it. Act like you have to wait for a check to cash. Although, you can get them taken care of pretty quickly these days. See this link for more references.

Try Not To Use Credit For Non Emergencies

Credit can be useful, but using it for non emergencies can be a bad idea. You could potentially end up in debt with a lot of interest to pay, and kids usually pick up their parent’s spending habits. Unless you have an emergency or it makes sense to use your credit for whatever reason, steer clear. Don’t spend money you haven’t got.

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Kerching! Getting It Right When Teaching Your Kids Financial Responsibility

September 26th, 2016 Posted in Uncategorized
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skint

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One of the most important things you can teach your kids is financial responsibility. If you inform them of the basics, then you can be safe in the knowledge that they won’t squander everything they have once they move out. Teaching them this important life lesson at an early age will also get them into some good habits, such as saving and budgeting.

But how exactly do you teach your kids financial responsibility? Most of it comes from experience. However, these are some of the things that you can try and instil in them from an early age.

Reward Hard Work

It is important for children to know that the harder they work, the more they can earn. So next time your children spend a couple of hours doing some chores, consider increasing their pocket money accordingly. However, you shouldn’t pay them for all the chores you do. This can help to teach them that some tasks are just part of growing up. The tasks that go above and beyond should be rewarded. And you should remind them that if they go above and beyond in their career, they will reap the benefits.

Encourage Them To Save

Encouraging your kids to save their money from an early age can help them get into good habits for the future. If you do give them weekly pocket money, remind them that it is important not to save it all at once. If they save it in their bank, they can save up for something that they have always wanted. When they are saving, you should also let them know that buying things

this way is a lot safer than taking out unsecured loans. Make sure that older children know that second charge loans are the safer option if they ever run out of savings.

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Get Them Involved With Budgeting

Whenever you sit down to do your monthly or weekly budget, try and get your children to join you. They can then see just how much work goes into planning the family’s money. Give them a chance to make their own suggestions of how you should spend the money. It is also a good idea to take them with you to the supermarket so they can see the money in action. Tell them about coupons and comparing brand prices can help them to save a whole load of money!

Let Them Make Mistakes

At first, your kids might make some mistakes with their own money. They could overspend their pocket money and might end up annoyed when they have none left! You should leave them to make these mistakes and not bail them out. Otherwise, they will never learn the importance of being sensible with their money. After making the same mistakes a few times, they will certainly learn from their mistakes!

You might be wary about leaving your children in charge of their own pocket money at first. But it will certainly pay off, and they will end up being extremely responsible with their finances!

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The 7 Money Mistakes That Parents Make

March 14th, 2015 Posted in Uncategorized
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parent's money mistakesWhen it comes to teaching your children about money, there is no single right way. There are, however, things you can do to guide them along a path and empower them to learn good financial habits. Below are 7 common mistakes that parents make when teaching good financial skills and habits to their children.

Money Mistake 1 – Pocket Money.
A danger with automatically giving pocket money is that it can create an entitlement mentality.

A young person having money of their own however is an important rite of passage and can form the basis of excellent financial education in budgeting, saving and spending.

One of my favourite money experts, Loral Langemeier is emphatic on the subject:
“NEVER PAY YOUR KIDS AN ALLOWANCE”
She argues that the best investment you can give your child is to teach them the value of entrepreneurship and the way that every economy in the world works. So instead of paying pocket money every week, design exercises and activities that are truly focused on basic finance.
Martin Lewis founder of Money Saving Expert is a fan of both pocket money and financial education – and he recommends encouraging children to work for their financial rewards, in order to embed a principle that will serve them well throughout life.

Money Mistake 2 – Not Talking About Money
Stay silent about money and you risk leaving your children open to the pitches of TV adverts and peer pressure.
Parents are the main source of money information for children, but 74% of parents are reluctant to discuss family finances with their kids, according to the 2014 T. Rowe Price Parents, Kids, and Money Survey.
Even if money is tight, don’t stress about it in silence.
When parents are worried about money but are not communicating their financial situation, children pick up on the anxiety and associate it broadly with finances. Rather than learning money lessons from their parent’s mistakes or situation, children instead learn that money is ‘stressful’ and ‘bad’.

Money Mistake 3 – Magical Credit Cards
Studies have shown that people spend 30% more when they use cards instead of cash. When you’re using plastic, it’s easier to ignore how much money you’re really burning through.
Credit cards not only wreak havoc on our budget, but also set a bad example for our children. Kids seeing cards being swiped and in the child’s eyes, you haven’t exchanged anything for your purchases.
Children need to understand that when we buy something, the money we’ve spent is actually gone. There are alternatives; using cash everyday instead will give your child a more realistic picture of how money works. Or when you spend using a card take some time to explain that that creates either a bill, which has to be paid, or is taking the money from your bank account as in the case of a debit card.

Money Mistake 4 – Setting a Bad Example
How can we expect our children to save money for the future when we don’t do it ourselves?
It’s very important that not only is saving a habit but a highly visible one.
This can include a savings jar prominent in the home, labelled with the holiday, event or purpose that it’s for. If your kids at whatever age see you putting your spare change in the jar on a regular basis they may get the bug and start saving themselves.

Money Mistake 5 – Saying Yes for an Easy Life
Many parents are actively teaching their kids about money – but their children are learning all the wrong lessons.
David Bach author of the Automatic Millionaire believes that the biggest mistakes that parents make is not saying ‘no’.
“I will go to someone’s home that is $30,000 in debt and their children have piles and piles of toys. This creates children who don’t know how to hear the word ‘no’ and they become adults who want instant gratification and live beyond their means. Plus, they miss crucial lessons like budgeting, prioritising desires and saving for something valuable”.
Never forget your great influence as a parent.

Money Mistake 6 – Not letting them fail
How often do we rescue our kids when they make a financial blunder? No-one wants to see their child fall down, literally or metaphorically but by always bailing them out we rob them of the chance to learn from their mistakes.
Fast forward to the teenage years and you may become accustomed to paying off mobile phone bills, covering car insurance or in one case I heard of re-mortgaging your home to pay off a child’s payday loan debts.

Money Mistake 7 – Mind your Language
Children make many requests every day. Parents will often deflect another purchase request by saying “I don’t have enough money on me” or “we can’t afford that”.
The language used to explain this to a child is very important.
An honest dialogue with positive language will get you positive results. Explaining why you’re not making the purchase gets kids thinking about prioritising their wants and teaches them to be more aware shoppers in general.
Rather than saying we can’t afford it try how can we afford it? This gets the young person thinking about ways in which they can take charge of the situation rather than being a victim of circumstance.

This article is an extract from Daniel Britton’s book The “7 Money Mistakes That Parents Make”  available from Amazon.com

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