Do you have kids? Well, they are not born understanding money. Most of what kids learn comes from you, the parent.
Here’s 3 ways to teach your kids about money.
1: Be open and honest.
Teach your kids about the family finances. Tell the 5-year-old that you aren’t buying the toy they want because you need the money for food or to save for a beach holiday. As they get older, let them know how much you earn, teach them that it is private and you are trusting them with the information. Explain to them mistakes you have made, the huge credit card or personal loan for example. The more open and honest you are with your kids about the family finances, the more they will learn from you that money isn’t free and needs to be managed.
2: Teach them how to use credit
Too many young people get their first job and first credit card or loan to go with it. Remember that by paying minimum payments a $5000 credit card debt takes around 33 years to pay back!
Introduce your teens to the idea of good and bad credit. Good credit is for things that make you money like investments, bad credit is for things that lose their value. Think cars and boats.
Show them how to use credit by setting an example. Don’t rely on a credit card as your emergency fund. Show them how to save instead. They will learn by watching you.
3: Teach them to be grateful.
Just by winning the lottery of being born in Australia you and your kids are amongst the richest people in the world. People that manage money well, do so with the knowledge that they are lucky to have what they do.
Showing your kids that part of managing money the right way means using your money to help others will teach them valuable lessons that will last a lifetime. Be thankful for what you have and help those who have less.
By being a positive role model for your children, they will learn to manage and respect money. It will help to set them up for a secure future.
I hope these tips help you and your kids,
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Ben Graham-Nellor is a Sub Authorised Representative (291391) of BGN Financial Management PTY LTD (ABN 45 672 104 196) which is a corporate authorised representative (468796) of Professional Investment Services Pty Ltd (ABN 11 074 608 558) which is the holder of Australian Financial Services License No.234951.
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