22 March 2020
By Lace Llanora
    

Real-life money management tips for your kids

 

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Good money habits can take a long time to form but money experts agree that the earlier we teach our kids about money, the better it is for their own future. If you ask why, just think about how your own money decisions have affected your life. There are money mistakes we wish we never made such as incurring credit card debt and there are sound financial decisions, like investing in a mutual fund, which we wish we made earlier.
 
We cannot turn back time but time is still on our children’s side. It is up to us to save our children from the consequences of bad money habits and equip them with the right money management skills to unlock their own financial freedom.
 
Here are some real-life parenting tips to teach your children about money:
 
1. Talk about money 
Discussions about money should not be painful. You do not have to be a registered financial planner just to start discussions about money with your child. Remember, money is a reality of life and it is connected to almost everything that we do.
 
So, how can you raise kids who are financially savvy?
 
Tony Robbins once said, “Teach them early about money. When your kid displays good behaviour, give them a homemade coupon.”
 
Start the conversation when they are young. Teach them the basic budgeting habits to manage their finances well. Give them an allowance based on a regular schedule that will help them learn how to manage it. As soon as your kids start receiving an allowance, teach them to budget by providing them a breakdown of where their money should be used.
 
For example, 40% allocated for spending, 40% for savings, 10% to charity and 10% towards family taxes.
 
2. Give them a job 
By 5 or 6 years old, your child has sufficiently developed physically and mentally to perform some chores around the house.
 
Giving allowance to your child for doing house chores can educate them on financial responsibility by teaching them how to budget and save. Even if all the allowance was spent on junk food, it’s okay. They will learn the consequences of their actions when their pockets are empty. It’s also a good time to teach them how to manage the consequences of poor financial decisions.
 
There are other advantages on giving your child a job to earn allowance as it provides them with a chance to understand the relationship between working hard and being rewarded. Using their allowance as a reward system for getting good grades in school could help your kids gain acceptance into a good college or get a scholarship.
 
Working hard is a habit. So, train your children to put in the effort on every endeavour. This habit will stay with them forever. The reward may be in the form of promotions, new titles, recognition, prizes, or appreciation.
 
Educate them by relating real-world experiences and instill life skills so they can always be financially well prepared for any unforeseen circumstances. Check out the stories and experiences from our clients here.
 
Money does matter for us to continue living a comfortable life. Talk to our advisor and let them help you plan ahead for a brighter future.

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