Perhaps we should look at our own spending habits first to ensure that we are not setting the illusion that we all have an endless money tree tucked away that can pay for every want without a cost. Think about how many times your children may have heard you say "id love to buy that!" (or words to that effect) and then ABRACADABRA it appears in the home or in your hand. This message is telling children that "if you want it... buy it" but they are not seeing the weeks work that you have slaved away at before being able to buy "what you love".
Nobody expects you to stop buying yourself nice things but perhaps if we were to show our kids that to purchase an item we love and do not necessarily need sometimes it requires sacrifice and a savings plan. Which leads to....
1. Children should be encouraged to hold "some" form of savings, From a money box to a debit account (depending on age obviously) this can begin as soon as a child has an income whether it be an allowance/pocket money for the "littlies" or a part time job for the "big kids". Savings at this crucial point in life should not be made boring, involve kids in interest accrual, savings goals, varied plans from short to long term and the power of compound interest.
2. Introduce children to the pro's and con's of debt. After a full explanation of debt to a child show them that if they must have it now it will cost them in the long run. Early education of the dangers of consumer credit may set a bad taste in their mouth and steer them away in early adulthood where every five minutes they will be coerced into signing to a pay plan or interest free (for the first 3 minutes) finance.
eg. Whilst shopping for a pair of shoes that you are going to buy them worth $50 they eye a pair that are far "cooler" for $80. If they don't have the cash to supplement the purchase then (if you can afford to do so) offer a line of credit that will remove a certain amount from their allowance for a set number of weeks. ensure that the Mathematics of this are quite simple and ensure that they will repay you $40-$50 instead of the $30 had they had the cash up front. They will pick up on YOUR "mathematical error" very quickly and this may be the best demonstration of the dangers of "buy now pay later", If this doesn't work a couple of months on half their regular allowance will.
3. Extra work. If your child is old enough they should be encouraged to find part time or holiday work! if they are a little too young then(once again if you can afford to) offer extra chores to help instill the work for dollar principle.
4. Bills can be paid by everyone in the house! If a light is left on when your child goes to school then that has just cost YOU money, So, on a notice board set a rate for various expenses around the home. On the day that allowances/pocket money is paid the bills from the notice board come into play
eg. A light left on all day $.50c,
milk left out of the fridge $.50c,
overtime on the phone $1, Etc.
This will very quickly get kids thinking about wasting money and for a change it will cost THEM! you should see a drop in your utility/shopping bills in the not too distant future.
In this day and age one of the most important gifts we can give a child when we send them into the big wide world is a good understanding of money. So let's go and get creative and teach our kids a lesson that they will thank you for when their age.
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