When asked this question recently on The Cafe TV show, it was a case of elimination as there really are a number of habits we deem important for kids to develop to help them understand the value of money.
When it comes to starting our kids on their financial and money education journey you have to start with the basics. It's not rocket science (although that would be fun), but developing some key financial fundamentals from a young age will prove invaluable and steer them well in adulthood. If your kids can truly understand and appreciate the value of money their financial journey will be more positive and secure.
So, here are the three most important habits your kids need to develop:
1. Earn and Save their own money - it can't just be handed to them, sounds obvious right?
- The Bank of Mum and Dad shouldn't last forever - it's not great for you or your kids.
- There is a great sense of pride that comes with earning your own money and you very quickly realise the value of it when you personally put the effort and time into earning the money.
- If money is just handed out to kids like lollies it's all too easy for them to spend it as the reward factor is so low - next time they come to you with their hand out why not suggest they complete a job/task in return for the cash - make 'em earn and work hard for it!
2. Have a Goal(s) - they need to know what they are saving for.
- A goal keeps you motivated and focused - it doesn't matter how big or small the goal, the point being you know what you're saving for and why its important to you.
- Getting into the habit of setting smaller/short term financial goals today like having x amount for spending on your upcoming family holiday or putting x amount away towards that new bike or pair of shoes helps to set kids up with setting larger or more long term goals like having money for rent when they go flatting (if they ever leave home!) or putting towards a deposit on a house.
- Without a goal, it becomes too easy to frivolously spend money and at the end of the month have no real clue as to where it went and on what - one month of unwise spending soon becomes two, three and before you know it a year has passed and the saving account bank balance is a big fat zero.
- The sense of achievement in smashing your goals is motivation enough to keep on smashing more of them...it's like opening a packet of pringles, once you start you can't stop!
3. Keep a budget - this is the plan to help achieve the goals.
- A budget is like a road map - plotting out the journey to help get you to your final destination. It helps to keep track of where the money is going, what it's being spent on and how is being saved.
- Without a plan, goals won't be achieved and if kids get into the habit of saving first and spending second, they can jump right to the front of their financial journey - the rooftop is down and the sun is shining - they are driving the 'financial freedom' highway!
- Budgeting is for everyone. It doesn't matter if kids' only expenses are takeaways, the movies or app downloads and they earn a $5 weekly income from pocket money - getting into the habit of keeping a regular budget will mean when they leave home to go flatting or own their own home, they are better equipped to ensure they can afford their lifestyle, but more importantly, achieve their financial goals.