Children are the investors and business owners of tomorrow. They will make decisions that will affect their financial well-being. Will they be capable of making these decisions?

A solid financial foundation built by their parents should make them responsible when it comes to finances. The question is, are parents building a good financial foundation? Do they know the value of money? Do they have a saving mindset? 

As a parent, you set the example as often your children mimic your actions. 

Are your bad financial habits influencing the way your children see money? Will they also end up with a shortage of retirement savings, have the instant gratification bug, or be deep in debt?

There are some vital lessons that your children need to learn to become financially literate and confident in their financial choices.

• Tax - Children need to learn that they don’t get to keep everything from a young age. If they get a monthly allowance, always ‘tax’ them a little. They will soon realise the value of money if they have to give away part of it to taxes. You can make it a ‘sweet tax’ or a ‘hobby tax’ etc.
• Savings – Probably the most important lesson is to teach a savings mindset. Make them commit to, for example, 15% of their allowance to a savings account for that special item they want to purchase. A big reality is making them realise that they will have to save their cash (No instant gratification) if they want something bad enough. We are not talking about gifts and clothes and even a car. If they want an iPhone instead of a cheaper android, they can save up for it. It is a luxury and not a necessity.
• Invest – Teaching about saving is important but teaching them how to grow money is even better. Expose them to interest-earning savings, open a custodial investment account, or sign them up for a savings app. This way, they can see how their money grows and how much interest they earn.
• Spend – Children need to spend their money to learn how to pay for something and what things cost. Take them on regular shopping trips to buy their own goods.
• Give to charity – Giving should be a part of their education. Donating to charity or organising fundraisers to help those in need builds character, integrity, and compassion for other humans.
• Earn their allowance – No matter how wealthy you are, your children need to realise that they have to work hard to earn money or to make it grow. They need to know that an allowance is not a right; they need to work to earn it, even if it is small chores around the house, like feeding the pet, mowing the lawn, or keeping their room tidy. You can even create a chart of tasks to tick off. If all gets done, they receive a full allowance; if not then a portion of it.

As a parent, it is your task to educate your children on sound financial principles and build good financial habits so that when they are adults, they will be financially secure and independent and not worry about their retirement. [email protected]

Please note the above is for educational purposes only and does not constitute advice. You should always contact your deVere advisor for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken as a result of reading the above.