Give your children the gift of personal finance basics
Children learn financial management from their parents. At a very early age, our kids become aware that money comes from a machine outside a bank (ATM) or a supermarket cash register (EFTPOS); and that flashing a thin sliver of plastic allows us to walk out of a shop with just about anything we want.
So it comes as no surprise that older children can believe that a credit card is the one and only option when cash is needed instantly. Of course, people skilled in financial management know that’s crazy because nothing capable of growing in value or earning an income return is ever purchased with a credit card and the amount that is ultimately repaid often far exceeds the original purchase price.
It is a natural urge of all parents to want the best for their kids. Consequently, we all invest a lot of time and money into their education and career guidance. However, the ability to earn good money is only half the story. Keeping the money they earn and making it grow is far more important.
This ‘make-or-break’ chapter of our children’s education is so often missing because parents don’t have the skills themselves. As a result, young people do not see a good example in the way their parents manage money. Worse, they see bad habits on a daily basis and copy them in the innocent belief that Mum and Dad are right. They can also copy the negative behaviours that relentless money stress can cause!
One way or another, our children need to be shown good money skills. With these skills, there would be less pressure on them to become high income earners just to get by. Without self-imposed financial pressure caused by bad habits and a lack of know-how, our kids could be encouraged at a much earlier age to follow their dreams instead of the drudgery of a life lived merely for the sake of money.
To me, this is what personal financial management is all about – a life well lived!