How to prevent Children from becoming Financially Dysfunctional Adults
 Jamie Oliver, the celebrated Master Chef, has announced plans for his four children, saying that as soon as each reaches the age of ten, he will put them to work in the family business.
Jamie Oliver, as we know, could afford to buy his children all the labels under the sun. But by introducing them to the world of hard work, he's giving them a gift more valuable, he's making sure that they'll be able to buy their own.
Children and young adults today are arguably less clued-up about money than any generation before them. Recent trends which has parents vying with each other to protect their offspring from financial realities has resulted in "Cost" and "value" being meaningless to the average teenager. While parents continue to dip their hands into empty pockets so as not to deprive their children, they actually deprive them of learning the one thing they need to know about money: where it comes from.
Parents need to realise that the way we spend money is based on our family value systems. Our parents first influence our attitudes towards money and with that in mind, it is important for parents to think about how they are going to teach their children to be responsible consumers and money-handlers. Children need to learn about the value and function of money, about managing money, budgeting and setting priorities.
How can parents teach these uses of money? Here are some suggestions:
Be a good role model.
Children observe the way that you handle money. Your spoken and unspoken attitudes about money are picked by your children
Communicate and include the kids in family budget discussions.
Children respond better than we expect sometimes. Having them included in finance discussions brings about an awareness of what the family can afford and this enables them to tailor their needs accordingly.
Help your children to become informed consumers.
If you go shopping with your children and they observe you reading labels and comparing prices, your children will remember this strategy, and will probably do the same thing the next time they go shopping.
Teach your children to set financial priorities.
It's a good idea to give children choices when spending money on them. For example, we can either go eat out, go to the movies or go bowling, but we can't afford to do all three. They learn the value of money, that there is a limit and they have to set priorities when spending their money.
Share money management.
Children should see both parents involved in the overall plan of managing the family finances. They should learn that men and women, whether working in or outside of the home, take an active role in financial goal setting.
Don't attach emotional value to money
Do not use money as a reward or punishment or to "buy" your children's affection. Good behaviour and assuming family responsibilities should not be linked to money. Kids catch on quickly that they are being bought and will take these feelings into adulthood.
Use an allowance as a learning tool.
Allowances are not necessary, but can be a valuable learning tool if parents have enough money in their overall budget plan. However, children shouldn't be paid to make beds. They should be taught that chores are just a contribution to the family.
Open a bank account.
It is a good way to teach children to save and a good way for them to save for bigger purchases.
Teach youth about the wise use of credit cards
There is nothing wrong with credit cards - it is the management of them that can be a concern. Young people have to know that money is a commodity - whether credit cards, a loan or cash - it is all still money. If a young person is away at University, it can be a security to have a credit card in case of an emergency. But stress that they need to keep track of their credit card purchases and that they need to pay the full amount owing before the due date.
Teaching children about money management will help pave the way for their future. When they leave home and enter the real world of personal finance, their basic understanding and value of money learned in the home will be the fundamental attitudes carried into their new and independent lives.
Aneesa Khan | Assistant Financial Manager. |
