In today’s increasingly complex financial landscape, instilling a sense of confidence in our children’s relationship with money is critical. As parents, we hold the key to equipping them with the skills and mindset needed to navigate the financial challenges they’ll inevitably face. From early piggy bank lessons to more sophisticated discussions about budgeting and investing, nurturing financially confident children requires intentionality, patience, and a commitment to imparting lifelong financial wisdom.
Speak openly about finances: It is important to talk openly, albeit age-appropriate, with your children about money and finances to demonstrate that financial matters need not be shrouded in secrecy or mystery. Overtly secret discussions or hushed debates about money can lead your children to think that financial matters are not for open discussion and should be kept underground. The need for secrecy or concealment can lead to feelings of guilt, shame and fear when it comes to money matters, causing unnecessary money-related anxiety later on in life. Be open with your children about the family finances using their age as a guideline for what level of information is appropriate for them to absorb and process.
Encourage decision-making: If you’re paying your children an allowance or pocket money, avoid trying to micro-manage the way in which they choose to spend their money. Rather, allow them to make mistakes with their money so that they learn early on what it feels like to have regrets about poor decision-making. Learning to live with the consequences of one’s decisions is an important life lesson. In the process, you might also help them brainstorm ways to rectify the decision or put steps in place to ensure the mistake is not repeated.
Demonstrate honesty: Be sure to always demonstrate honesty when it comes to money so that your children know that it is never okay to cheat, conceal or tell untruths about money. If you’ve mistakenly short-paid for an item, demonstrate to your child that the right thing to do is go back to the shop and pay the difference. Avoid haggling with informal traders to try and get the cheapest deal. Rather, impress upon your children the importance of supporting small businesses and paying fair value. Don’t conceal purchases from your spouse or partner and ask your child to participate in the cover-up. You are your child’s role model, and she will take her cues from you in terms of the financial behaviour you consider permissible and/or acceptable.
Demonstrate how money can be used for good: It is important for your children to see you using your money and/or resources for good. Whether in the form of charitable giving, pro bono work or providing services to someone in need free of charge, your giving will help your children appreciate that money can be put to good use in uplifting communities and helping those less fortunate than ourselves. More importantly, if your child can witness the joy you receive from giving to others, she may become motivated to participate or start pursuing her own charitable interests.
Don’t make budgeting a punishment: Speak about the household budget positively so that your children develop a healthy respect for budgeting. Instead of using the budget as evidence of all the things you cannot afford, demonstrate how sticking to the budget ensures that there is fun money at the end of the month that the family can enjoy. This will help your children develop a positive association between the budget and the ability to afford good experiences and fun times with loved ones.
Avoid comparisons: Avoid judging other people on the amount of money that they earn or by their accumulated wealth as this may lead your children to believe there is a link between money and self-esteem. There is no connection between a person’s integrity or character and their net worth, so avoid misleading your children into believing there is. Similarly, avoid judging people for being poor. Rather, demonstrate through your actions that a person’s values and character are what makes them a good human being.
Don’t fight about money: Arguing with your partner or spouse about money can lead your children to associate money with tension and discord. While money can be an enormous source of tension between couples – and very often is – avoid exposing your children to arguments and acrimony. Ideally, demonstrate to your children that, while it is only natural for the two of you to have different views about money, you can find a way to make compromises and create solutions that work for both of you.
Don’t associate spending with guilt: Encourage your children to make smart money decisions by encouraging them to do their market research, compare prices, check quality, and assess whether their desired purchase is a ‘want’ or a ‘need’. Avoid making them feel guilty for making a purchase, especially if they’ve done their homework and can justify their spend as this can result in them associating spending with shame.
Allow them to work for money: Getting children to appreciate the value of money is an age-old challenge. That said, one of the surest ways of helping anyone appreciate its value is to allow them to work or do chores in exchange for money. Be sure to set an appropriate value to each chore so that they don’t attach unrealistic worth to each job or chore. As they get older, allow them to negotiate their wages and motivate for increases as these are useful skills for later in life.
Encourage entrepreneurship: Do everything you can to encourage their entrepreneurial ambitions by allowing them to share their ideas without fear of ridicule. Avoid responses such as ‘you’ll never make money doing that’, ‘you can’t make a career out of that’, or ‘that’s not a proper job’. The pace at which global disruption is taking place means that our children will have career options available to them that do not yet exist. Encourage their dreams and help them to research their ideas and learn more about how to develop the required skill set.
Choose your words carefully: Be aware of the way in which you talk about money. Negative words and phrases can cause your child to develop a scarcity mentality which can severely limit their view of money and finance. Those with a scarcity mentality believe that money is finite, debt is inevitable, and they will never have enough resources to reach their goals. Phrases such as ‘I’m broke’, ‘we can’t afford that’, ‘we can’t make ends meet’, ‘you kids are costing me a fortune’, and ‘money doesn’t grow on trees’ are examples of a scarcity mindset. Instead, consider using phrases such as ‘I need to generate additional income’, ‘we can make ends meet if we budget carefully’, and ‘let’s work out how we can afford that’ which instead speaks to abundance and possibility.
Honour your financial commitments: Impress on your children the importance of honouring your financial commitments, paying bills on time, repaying loans, and paying your own way. Don’t be afraid to share your financial goals with your children and keep them updated on your progress. There is no better way to teach children the value of goal setting than to show them practically how it works. Celebrate your success with your children and allow them to share in the excitement.
Be open about your past money mistakes: We’ve all made financial mistakes, and it’s important that we share these mistakes with our children. Not only will it help them avoid making the same mistakes, but it will help them realise that we are all fallible and capable of making poor decisions. It’s how we rectify our decisions that really matters, and these fixups can be valuable lessons.
Have an amazing day!
Sue
