AS WE celebrate Child Month, it is every parent's dream to make a good life for their children, especially if the life they knew as a child was filled with struggle. However, it is advisable not to deprive your child of growing up with a sense of independence. They shouldn't be running to Mom and Dad for every little thing.
Two key strategies to employ in raising money-smart kids, is to use real-life examples when talking about money, and practising what you preach. In other words, your actions should reflect what you're trying to teach your kids. Teach the difference between needs and wants. A child's need for an educational book, clearly, is more necessary than their want for a remote controlled helicopter.
Teach them to save for the 'wants', especially the ones that are expensive. Let them know that it is more beneficial for them to have the 'necessities'. Of course, this doesn't mean you cannot 'spoil' them now and then, by giving them the 'wants'. By instilling this in them, you are paving the way for their being able to say no to unnecessary things that may put them in debt, when they get older; or even things that may cause them mental and bodily harm.
SAVINGS TARGET
Motivate them! Give them a savings target to reach at the end of the month, promise (and don't forget to keep it!) that you'll double the amount they have if the target is reached. Start a savings account for them and allow them to continue saving in it, showing them that the more they save, the more interest they'll receive. At a convenient age, encourage them to get a part-time job; the money they get from you along with what they earn, will allow them to have more to save. There's nothing like the feeling of pride when receiving their first pay cheque. You can also introduce them to investing after they have accumulated a certain amount in savings.
Encourage decision-making. If you have two bills to pay, ask them which one they'd recommend you to pay first, based on priority. Instead of issuing cash every day, give them an allowance; it would be good if you give them spending money as well as lunch money etc. Encourage them to budget this cash; saving towards the bigger things they want instead of getting the little things immediately.
Little information
We don't want to burden them with information that will fly over their heads; like mortgage payments and car loans. However, you can tell them the connection between work, salary and taxes. Let them know that you get paid for the amount of hours you work, and the Government takes some of that money in the form of taxes. The rest is what you take home to budget for the family.
THE COST OF CREDIT
Before they've reached the age to access credit cards, it is advisable to instil in them the cost of credit. Inform them of its potential to leave them deeply in debt. Let them know that they first need to have a solid plan for paying these credit card bills on time, in order to escape interest charges. Tell them, if it is possible, to save and purchase what you want, rather than taking it on credit, do so.
In following these tips, you will be teaching your child to respect money and, overall, raising money-smart kids. In the long run they'll be thanking you, when they see the returns they've made on their investments.
To further discuss investing and the many options we have available, contact DB& at info@mydbg.com or toll free at 1-888-CALL DBG.
