Teach your children well about the power of money

I have extolled the virtues of sound financial management and the benefits it can bring. Unfortunately, all the sensible advice in the world is worthless if it comes too late or if it falls on deaf ears.

I have extolled the virtues of sound financial management and the benefits it can bring. Unfortunately, all the sensible advice in the world is worthless if it comes too late or if it falls on deaf ears.

Telling someone about the importance of setting aside a fixed amount of savings each month is pointless if they are already deep in debt.

At that point all you can do is "damage control" to curtail the disaster. Re-educating the offender will have to come later.

The key to ensuring that economic sense is firmly entrenched is to begin at an early age. Even children of four have an awareness of the power of money. If they ask for an ice cream and you reply that you don't have money on you, they'll learn that they can't have one at that particular time.

Next time they'll first ask you if you have money, and only then ask you for the ice cream.

At that stage there's no need to introduce a formal educational programme - just the basics will do. Children need to know that money has to be earned by hard work and that it isn't infinite, so they have to make choices about how they spend it.

If the child wants a chocolate and an ice cream, tell them there is money for one treat only and they should decide which they prefer.

As the child gets older and begins to receive pocket money, they will already know they have to make spending choices.

Later you can introduce the concept of saving by telling the child that if they want an expensive toy they have to forgo their weekly sweets indulgence until they have enough money to buy the toy.

Managing money is all about making choices and, in some cases, sacrifices.

It's vital that children respect the value of money - whether they earn it or it is given to them.

Part of the parent's role as educator is to teach by example and make sure they are sending their children the right messages about money.

Handing out money with cautionary explanations is not enough. Children need to see their parents paying bills, depositing money in savings accounts and giving to charity.

To understand the concept of financial responsibilities children need a practical example: make them pay their cellphone bill for a month or two. The child will soon learn that instant gratification is costly and that expenses have to be managed by a budget.

But don't become preoccupied with it to the extent that it becomes an issue. If a child asks for an ice cream on a hot summer's day, give it gladly and without preaching. After all, ice cream is one of the simple joys of childhood ... Money worries can wait a while.

lThe writer is a director of Pioneer Financial Planning. Visit www.pioneer.co.za or e-mail help@pioneer.co.za

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