Of all the lessons we teach our kids and the habits we pass on, teaching them to manage their finances is certainly among the most important. Here are five great money habits to pass down to your kids …
- DON’T LIVE BEYOND YOUR MEANS
These days it is far too easy to spend more than you earn. Loans, credit cards and store cards all offer temptations that are difficult to resist. Kids are also exposed at a very young age to the idea of ‘keeping up with the Joneses’, when their friends wear expensive brand name clothing, for example, or have the latest game console. Teach your children the value of every rand, help them realise how their money can quickly run out and their debt speedily spiral if they cultivate expensive tastes. - SAVE, SAVE AND SAVE SOME MORE
Children should understand the concept of saving for expenses that they can’t anticipate (such as a broken mobile phone or a stolen pair of shoes). Emphasise the importance of saving up for things they want, rather than going into debt to get them. The old-fashioned piggy bank is a great tool to cultivate a savings attitude in children. Children are master negotiators, so encourage them to develop their negotiation skills and put them to good use in managing their future finances. Teach them to seek value and opportunity. - AVOID THE DEBT TRAP
Owing money can be one of life’s biggest worries. A good way to emphasise how debt drains your finances is to show your children concrete, visual examples of how the monthly interest paid on debt is a waste of their hard-earned cash with absolutely no return. However, if they should get into debt when they are older, teach them how important it is to pay off those high-interest debts first. - ANTICIPATE THE WORST
You never know what life may throw at you, which is why needs-matched life cover is important. Teach your kids about having enough cover in place to protect their assets and liabilities, and by doing so yourself, you will be able to provide your children with financial security in the event of a serious illness, disability or death. Get cover that is able to change as your life changes. Try to instil in your kids a strong sense of responsibility so that they protect their income from the day they start earning. Also encourage them to continually review their financial plan as their needs change, and not just put the money away every month and forget about it. - STICK TO YOUR BUDGET
Budgeting is probably one of the most important pieces of knowledge that you can pass on to your children. They need to be very familiar with the concept of planning ahead and limiting unnecessary expenditure. Teach them the difference between luxuries and necessities and how they should approach what they spend their money on. Ensure they know that any money they have left over at the end of the month should immediately be put into savings
Details: Article supplied by Clyde Parsons, Chief Innovation Officer for life insurance provider BrightRock, www.brightrock.co.za
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