Turn finance into child's play
Kids who budget smart can reap sweet rewards
One of the areas we need to focus on is financial literacy for children. It's pointless talking transformation if we're going to neglect arming youngsters with the knowledge they need to create wealth.
This isn't to say financial literacy will fix everything, but it's an important aspect of the journey and shouldn't be overlooked.
There are many ways to teach children - regardless of age - the value of healthy financial habits.
Curb the spending:
If your children get an allowance, be strict about the conditions of the allowance. Help them to build discipline. You can download 22seven - a spend-tracking app - and set goals together. The app will help them keep a close eye on their spending. They can use it to set goals. Every time they spend when they should be saving, they'll be able to see the real-time impact of not sticking to their plan.
If your children are too young to navigate the 22seven app, sit with them once a month and go over their bank statement.
If you're at the piggy-bank stage, you can draw up a simple statement on a programme like Excel to keep track of income and spending.
Money must be worked for:
Tie chores to rewards so children have a sense of responsibility. They'll appreciate money they've worked for a lot more that way. It'll also motivate them to reach goals they've set for themselves, while helping you keep an orderly home.
This isn't to say you need to tie a reward to every chore. But when they go beyond what's required, perhaps tie a little incentive to it.
Money can work for itself:
Teach your children the wonders of compound interest - but let them experience it both ways.
It's important that they understand that money can grow without much input from them - if they can leave it alone. Introduce concepts of investing and explain the benefits of delaying gratification.
It's important that they understand that interest will be charged when they borrow money. This will help them think about cost and expense in a different light, especially if they can see how much they stand to lose if they're impulsive. The sooner you can get your children to think differently about money, the better.
Discuss finances openly:
It's difficult for parents to talk money with their kids - but they must understand where money comes from, how to prioritise and what's left for leisure. Draw up the family budget with them. If they're old enough, take them to your appointments with your financial adviser. Discuss estate planning with them so that they're aware of your plans in the event of your death.
It might seem heavy at first - but, the sooner they get accustomed to these conversations, the easier it will be when they have to take care of their own finances.