It is so important that our children understand all about finance so that they can keep control of their own finances when they have to live on their own. Parents use to just lead by example and this could have helped some children, but only those that were observant and only those who had parents that handled their money well. Whether parents are good or bad with money themselves, it is important for them to make sure that they teach their children the right things to do with money.
There are many different aspects to finance such as debt, saving, investing and budgeting and it can be difficult knowing where to start and it may even be a bit daunting for some. However, there is no need for it to be difficult as you can just start by showing them what you are doing with money. It may be that you think you are not a good role model that you are not good with money, but that is fine. You can highlight to them why you think your choices have not been wise, so that they can learn from your mistakes. You can also go to some websites for help and guidance on how to teach finances to your children.
From when they are quite young you can show them prices in supermarket and explain to them how you make choices as to what to buy. This may be based partly on price and partly on what you enjoy and it is great to show them that you prefer certain brands and think they offer better value for money despite the fact that they are more expensive. You can show them how you can make a budget with shopping and add up as you go to make sure that you only spend a certain amount of money.
It is also worth explaining to them about your financial commitments. How you have to pay rent or mortgage to live in your home and then pay for all of the bills that go with it such as council tax, insurance, electricity, gas, water as well as food and clothing, which are the things they are more likely to see you buying. Explain how as you get a bigger property all of these costs will rise and so people choose the size of their homes according to what they can afford to pay for, not just with regards to the cost of the rent but the cost of the bills and maintaining the property as well.
It is also very important to address how important saving money is and what the difference is between saving and investment. Then to explain about debt and how it can be useful but it is a risk. It is worth explaining about risks with investments as well. It can even be good to give them examples of financial decision they may face such as whether to borrow money for a home, holiday or car and get them thinking about it and discussing both sides of the argument with you. Getting them understanding that money decisions need to be considered and are each very different as they are specific to personal circumstances is so useful for them.
Keeping money as a conversation that can always be talked about and letting them discuss their money concerns with you as they get older is good too. Do not be judgemental if they have made errors, but help them to improve their habits in the future. We all learn things by making mistakes, but if you can teach them as much as you can as they are growing up and then guide them gently when they do make mistakes, you are doing as much as you can. Buying them financial books as they get into their late teens can also be extremely helpful. Children do not always do what their parents advise them especially as they get older as they want their independence and to show they can do things on their own. So if you give them some books and guides, then they can follow their advice rather than yours and feel like they are making a more independent decision. Just make sure that you choose books that you agree with!
