Many Aussies want to buy their own home to raise a family and set themselves up for the future. Owning a property is also one way to look at securing your children’s future.
If you’re a parent, you might have wondered at some point, ‘how can I help my kids develop good habits with money so they can make sound financial decisions as adults?’
Many of our habits and attitudes are forged earlier in life, which means what you teach your child about money now, can have a positive impact on them later in life.
Talk about money
It’s important to engage your kids in talking and thinking about money. Instead of teaching them “money doesn’t grow on trees!”, when your child asks you to buy something for them, talk to them about the real source of money.
Kids are curious, so make it your job to cultivate financial literacy, confidence and the motivation to save money. Help them make the connection between work, savings and paying for everyday expenses.
ASIC’s MoneySmart website suggests getting kids involved in conversation as you deal with daily financial matters, such as:
- At the ATM: How did that money get there? Explain how your balance changes when you make a withdrawal. How do you decide how much cash to withdraw? What’s the difference between using a card or cash to pay?
- When you shop: Why do different products have a different price? How do you compare products and find a better price? Can your kids help you work out a better deal?
- Bills and budgeting: Explain what bills are, and how they relate to family life. For example, paying for electricity, internet access and the mortgage. Come up with ideas for saving money, for example, holidays, play equipment, a car, and give your kids a say in creating your family budget
Be mindful about giving kids money
Giving kids money to spend helps them practice money making decisions, but it’s also worthwhile to set some boundaries.
For instance, you might have a rule that 20 percent of all the birthday money must be saved, and the rest can be spent as desired. Kids won’t always make a wise decision, but a few failed ‘investments’ can open their eyes to the pain of the money wasted.
Rewarding kids with money may send a wrong message. As a general rule, don’t offer money for things you expect your children to do or strive for on their own.
Author of the book Make Your Kid a Money Genius (Even If You’re Not), Beth Kobliner argues that paying kids to do chores or get good grades undermines the intrinsic motivators – like helping out, or achieving something with hard work.
Guide your kids towards good financial decision-making so they can confidently face the challenges of saving for a deposit for something of value like a home, making big financial choices and weighing their investment options as an adult.