3 Tips For Educating Our Children About Money

‘Money talk’ is something many parents either steer clear of with their children or are unsure on where to begin. More often than not, it is because this is a conversation that was never had with them, when they were young. This is experience talking here.

I worked for almost 20 years in the wealth and investment advice industry and over that time quickly realized it was a conversation that very few people had. So, as a father of three, it is a conversation and set of practices that we have with our three. Well, two out of three as one is only 18 months old. Even I believe that is a bit young.

We started at the age of four, but I acknowledge that each child is different. So, what are the three keys to building a financially aware child?

• The Three Jars

I picked this up over my journey and is something I practice today. We provide each child with three physical jars.

• • Spend
  • Invest
  • Donate

Your obligation is to then have the conversation around how each jar would work:

• What we can spend our money on: Experiences or Things. You can spend your money on something material like a toy, or on something that creates a memory, where you have an experience e.g. going to the Zoo or a painting class. This jar also brings in the goal setting conversation. What do you want to buy? Why do you want to buy it? And by when? Attach a goal.
• Basic principles of investing: The basic concept that money can build over time. It could be holding it in a bank account (savings account) or buy purchasing something (a collectable), that could be worth more in the future. This teaches patience.
• Donate: I introduce the idea of gratitude and the importance of helping others. Being thankful for what we have and how we have the capacity to help those who are not as fortunate as us or need our support.

• Incentivize for effort: As opposed to simply giving the child pocket money (no effort), provide incentive for effort. This could be a small incentive for helping wash the car, take out the bins, mow the lawns. For their effort they get reward. Alternatively, help them start a business. Again, it could be washing people’s cars, selling flowers on your street or mowing lawns. Help them build a business and nourish the entrepreneurial mindset.

• This one comes back on us, don’t make money a negative thing. Living expenses are high right now. Everything costs a fortune and for many job security is low. Be mindful of not broadcasting your worries, your stress about ‘objects’ and re-iterating how expensive things are. Re-frame or help them understand through conversation not argument or snapping. This negative association with money could stay with them for life.

I want to educate children on the positivity of what money can provide and bring into our lives and the lives of others. As parents, we have the capacity to do this. It is never too early or too late.