Entitlement: teaching children the value of money
Teach your children the value of money and they'll learn to appreciate all the things they have.
We all want our children to be able to enjoy their childhood and live a carefree existence. But, it's also important for them to develop an understanding of the effort that goes into earning money, so that they can learn to appreciate the things they have. If they get everything they want, without understanding the value of money, it can give them a sense of entitlement. And this may set children up for disappointment later in life.
The sooner your children begin to learn about money, the sooner you can start reinforcing good habits. So here are some tips for teaching your children the value of money. I hope you find them useful.
From birth to 5 years
One of the biggest traps is buying things for your children every time you go out. And I know how easy this is to do. In the short term this can make them happy (and probably you too), but in the long run you're teaching your children bad habits. Learning the power of 'No' will give them a much greater appreciation of when you say 'Yes'.
Also be sure to use a mixture of card and cash to pay for purchases when you're out with your children. This will give them a much better understanding of the two, and start to demonstrate that they are both linked. When my children were little, I used to let them pay for small purchases when we went to the shops for things like milk and the newspaper. This can help them get used to the exchange of money for goods.
From 6 to 9 years
Once your children are at school you can set up a savings account and platybank for their pocket money. Then every time your child receives pocket money or money gifts from birthdays, encourage them to divide it between a savings account and platybank for spending. This will encourage good habits from the outset. And since money gifts are quite common these days (my kids still get them from their grandparents), this is a great way for them to save for those bigger ticket items.
A savings goal will also help them visualise why they are saving. Place a picture of the item they want on the fridge and use a savings barometer to help them track their progress (this will give them a sense of accomplishment as they progress towards their goal). Also make sure the goal is achievable over a shorter period, like a month, so they don't lose interest.
From 10 to 15 years
As children hit their teens they become a lot more interested in spending money than saving it. So make sure you continue to talk about the importance of saving, even if it seems like they aren't listening. I know this can require a bit of persistence, especially when they'd rather just be spending time with their friends!
I've also found sharing your savings plans with them can help. Like if you're saving for a family holiday you might have a dedicated holiday account and you can show them a copy of the statement with the deposits you've made over a period of time.
Also encourage them to bank at least 10% of their pay when they get their first job. This will continue the good habit they set with their savings account when they were younger.