Accounting and Tax Blog

Four Things To Teach Your Children About Money.

  Gavin Bacon   Aug 15, 2016   Professional Accounting Advice   0 Comment

Money may not be everything but it sure will help you to live a more comfortable life, filled with opportunities. Want your children to understand how to treat money and protect their wealth when they’re adults? Of course you do! And the earlier you start, the better.

Little Boy With Piggy Bank

Here are four money essentials to kick off ‘money talk’ with your children:

  1. Money deserves respect: Life is all about choices and how you handle money is no exception. Children need to understand that money does not come from an endless pool (or willing ATM!) and that, for most people, it is hard-won. It isn’t an endless resource and it needs to be protected. When the opportunity presents itself (for example while shopping with your child), chat about smart choices and the concept ‘think before you buy’.
  1. Money can grow: Children shouldn’t be sacred of money – they should respect it. Along with being careful about how they spend it, money is there to be enjoyed. And it can grow. Spend time explaining the idea of savings, investments, growth, and the power of compound interest. These don’t have to be complicated discussions – just point out that when money is properly invested, it has the potential to grow and, through that growth, provide them with many opportunities. Help your child save their pocket money by offering them a great incentive like the chance to buy an expensive toy. As they watch the money pile up over time, they will be able to see themselves getting closer and closer to their goal until they are able to achieve it.
  1. When you give, don’t do it blindly: We teach our children to be generous and giving and that is a great thing. However, they also need to think about who they are giving to. When it comes to money, donating to a charitable cause because someone asks you to do so is not a good enough reason to give up your hard-earned cash. Encourage your child to ask ‘why this charity?’ and ‘what will they do with my money?’ These types of questions will help them in life and in business when they need to make financial decisions about what they are going to do with their money and who they are going to entrust with it. Once they understand that you don’t have to give your money away just because someone asks you for it, work on the idea of ‘give to gain’. With your child, select a charitable cause that means something to your family and makes a real difference in your community. Let your child see how their money is being used and why it is good to give to the right cause, at the right time.

Delayed gratification is good for you: Your children are probably already familiar with delayed gratification – though probably through no action of their own! Teach your children that, if money isn’t finite but it can grow, delayed gratification is definitely an option when it comes to desires, rather than needs. Include your children in spending decisions and let them decide how to spend their pocket money – for example, they could spend it right now on sweets or save it till next month and be able to ‘buy’ an experience, for example, a movie ticket that’s worth two month’s pocket money and offers so much more than the sweets. The ability to save up for something worthwhile is a skill that could change your children’s lives for the better as they learn that a financially secure future is much more attractive than immediate gratification.

As a parent, you are the first port of call when it comes to teaching your children the true value of money. If you want your children to handle money well (without bravado or fear), you need to teach them how to manage it and to appreciate its power.

Need some money management advice of your own? Contact us – as a group of professional accountants and financial accountants, we are highly skilled specialists in accounting and tax, and provide affordable professional advice on how best to manage your personal and business finances.

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