I HAVE no doubt that being a parent nowadays is a challenging job.

I HAVE no doubt that being a parent nowadays is a challenging job.

There are many lessons that we need to teach our children, which will become the building blocks of a solid foundation for later life.

Teaching our children about money and personal finances is one of the most important tools we can provide them with for their own future peace of mind, stability and independence.

And yet teaching children and young adults about money and financial planning is an engaging and difficult task. The younger generations have been exposed to consumerism and capitalism almost since birth and children as young as three years old know about money and its purchasing power.

There are a few key issues that I believe need to be included in every child's financial education. Every child and young adult should know that saving money is the first rule of financial success. It is an excellent practice to teach our children that the first thing to do when receiving money, whether it's a pay check, present or an unexpected windfall, is to take a certain portion of it and invest it in oneself. That means, before spending any of the money they should put some of it aside for a rainy day.

Each child should have a savings account by the time they are old enough to grasp this concept, and the parents need to encourage each child to put aside some portion of their birthday present or monthly allowance and make regular deposits into this account.

Another key lesson is that one must always know what one's financial limitations are, and then create a budget accordingly. Never use neighbours or friends as measuring sticks since appearances can be misleading. For all we know, our apparently well-off neighbour might be swimming in debt because of his over-inflated spending practices. Our children should know that what debt eventually does is give another person (or institution) control over their lives or at least their financial life and this should be avoided whenever possible.

I think that it is quite beneficial to introduce our children to the family budget, and share with them where our money comes from and where it goes.

Sitting down with our older children and reviewing this budget with them will help them get a better grasp of the concept of a budget and careful financial planning (which can be quite abstract for younger minds). We have to teach them to create their own budgets and spending plans

The next important lesson we have to teach our children is to plan for the future. It is never too early to begin to save towards retirement and all other big financial milestones in life (paying for college, buying a house and so on). While a savings account is a great tool to save money for a rainy day, these larger financial milestones require more powerful tools.

Once they are old enough to understand, we need to share with them these plans and how they are structured. Eventually, they will take over their own investment planning and hopefully the example we have set for them when they were young will carry forward in their own lives, which will ensure that their financial futures are secure.

l The writer is a director of Bryan Hirsch Colley and Associates. Helpline 011-880-4888.