Rands & Sense

Key money habits you can teach your kids

Sharon Moller

IN THE latest iteration of global investment firm T Rowe Price's 13th Annual Parents, Kids & Money Survey (see page 13), 63% of respondents said they learnt about money from their parents. At the same time, 41% said they don't like to talk about finances with their children — with the leading reason (56%) being that they are too young to understand.

But avoiding the subject ultimately disempowers your children and can even risk their long-term financial health, precisely the opposite of what this month's Youth Day celebrations are about. Money lessons aren't about how much money is available to you or your child, but about building healthy habits for the future, which is why it's important that parents teach financial literacy from an early age. Saving and investing are important actions that allow us to manage unforeseen life events and foster stability in a world that is often unstable. Instilling in your children an understanding of the importance of this is crucial in cultivating life-long financial health.

EMBRACE HEALTHY FINANCIAL HABITS

This will give your teens and preteens a sense of what is in their control when it comes to money. In teaching your child about managing their money, you also start to build awareness around concepts like inflation, tax, and market fluctuations, which I am sure we all wish we learnt about much earlier in life.

SET A GOOD EXAMPLE

The experiences our children have while growing up shape their relationship with money. If we as parents do not demonstrate healthy, positive attitudes and behaviours, then we run the risk of passing on these bad habits onto our teens. Some of these bad habits include spending on credit and not saving; not having a purpose or defined goals when it comes to investing; not having a set budget for each month’s expenses; and placing too much emphasis on how much money we have rather than on how skilfully we manage it. Cultivating awareness of our thoughts, feelings and behaviour around money – and the values and beliefs behind these – paves the way for conscious, positive habits into adulthood.

START THE CONVERSATION

Talking about money and what it means to the family's collective dreams, goals, and day-to-day household management is so important — more so when there is a shortage of money.

In the T Rowe Price study, 80% of children respondents said it was very important that their parents speak with them about saving and spending wisely, indicating an appetite for information that parents may not always be aware of. Of course, this doesn't take away from the initial apprehension parents may have about discussing finances, but any compromises that we need to make during these times need to be clearly understood by your teens.

HERE ARE A FEW QUESTIONS THAT PARENTS CAN ASK TO GET THE CONVERSATION STARTED:

♦ How important is money to you?

♦ If you had lots of money, what would you do with it?

♦ How do you feel about saving for something you want? What do you wish you could make your money do for you?

♦ What have you noticed about how mom and dad work with money?

♦ Do you have any questions about money and investing? Do you understand why saving and investing are so important?

♦ As a family, in what ways do you think we could be more responsible with money?

Sharon Moller is financial planning coach at Old Mutual Wealth