Tips on how not to raise money morons

1. Money talk as crucial as sex talk

Start helping your children to be money smart as early as possible. Being financially literate means they will understand the value of money, earning, spending, saving, borrowing and sharing.

A child must first understand what money is, where it comes from, what it’s used for, and why it’s used. They then need to understand the concept of, and difference between, needs and wants and how these have to be met, having financial and personal, long term and short term goals.

2. Assign roles during shopping

Children are surprisingly intuitive and attentive when you take them along with you for your weekly or monthly shopping. Next time you do, tell your child about the item you’re looking for and ask them to find the cheapest one on the shelves.

3. Concept of scarcity

Children need to understand where money comes from. When children see cash pop out of the ATM, they don’t realise that money is a finite resource.

Explain that you work to make money, and the bank is just a place that keeps it safe. I have come across parents that don’t believe that money and finance can be taught from a young age. As a result, even as adults, they and reflect habits of overspending and savings difficulties since they never really understood how fickle financial resources can be.

4. Allowances and budgets

The best way to teach your children to start managing money is to give them some. If they blow their allowance on a new video game and don’t have enough left for a DVD they really want, that’s actually a good thing; they’ll have firsthand learning of choices and consequences.

Also, let them learn about emergencies. Children will always lose things; a sweater, a toy or an expensive book. If they have a history of being careless, ask them to start saving for such emergencies to help purchase the replacement item.

5. Delayed gratification

There are also many parents that always give in to their children’s wants and requests. Any toy, game or trend new in the market that’s immediately handed to a child teaches them a lesson that these things have no value, and that there is no priority between wants and needs.

Waiting a little while before giving in, or encouraging your child to measure the value of this new toy stimulates a habitual thought process and discourages impulsive buying in the future. Teaching kids delayed gratification will help combat the ‘buy now, pay later’ mentality that could mire then credit card debt later on.

So, as much as you can, reinforce the idea that waiting pays off. Curbing impulse buying goes hand in hand with teaching delayed gratification. Lead by example. Before you go shopping, create a shopping list and budget with your child. They’ll learn that planning purchases before you buy is the routine and will help them understand the value of money.

6. Special rewards

We believe that children shouldn’t be paid for doing regular household chores, such as making their bed or doing the dishes. However, if there is anything special your child does, or takes the initiative to do, like helping you tidy up a room, or perhaps watering your household plants, that would certainly warrant a special reward. If you give them allowances, let them earn them.

7. Concept of saving for wants

Saving for the little things, like buying a snack at school or going to the cinema goes a long way. Instead of giving them the cash, let them save up from their allowance so that they can learn that the more they save, the more they can do.

8. Differentiation between needs and wants

Teach your children to set goals to save money for things they really want. This forces them to think hard before making impulse purchases that might waste their money. Before your child spends money or asks for you to buy them something, ask them to consider how often they will use it, or where they will put it.

9. Sharing is caring

The concept of charity and donation shouldn’t be skipped. Encourage your child to think about someone or something they want to share their money with and why. Donating, whether their money or belongings, to the local animal shelter, or children’s hospital, is a value that should be taught from a young age.