9. We do… they learn: children and money

Adults do… children learn: how to raise financially responsible children.

Have you started talking to your spouse about money? Have you found ways to work together on planning, spending priorities and decisions? Let’s widen the circle and see how we can educate our children about money. Even if you are not a mother or father, think of the other children you may influence: your nieces/nephews, cousins, younger siblings, neighbours’ kids, youth you teach …
Without realising it, you already educate them. How? Kids learn much more by watching adults do and react… than by listening to lectures… especially when we don’t do what we say! So watch yourself! Put yourself into a child’s shoes… what practical lessons can you draw from these everyday situations?

• My parents don’t say no when I want to buy something at the shop.
• I never hear my parents talk about money.
• My parents promised me $ __ if I have good grades at school.
• My parents sometimes shop and tell the shopkeeper they will pay later.
• My parents talk about the latest electronics or fashion their friends have just bought and a few days later they buy them too.

We do, they understand.

Action plan:

• Observe yourselves for a few days… what you do with money, what you don’t, and put yourself into a child’s shoes: what can they understand?
• Go the other way round: list what you would like your children (or the children around you) to understand about money…  List the values (honesty, patience, accountability, generosity, etc…) you would like them to embody – discuss these values with your spouse.
• Identify practical situations where your children can watch how you practice these values. 

Let’s put this into practice

Don’t let your children be lost with money: did they learn walking by watching videos? How did they learn talking? Or writing? They won’t learn about money by reading a money book when they are 20… they need to practise, make mistakes and experiment!
Educate them by letting them manage money and taking responsibility as they grow older. Giving good habits and a value framework is our main role as parents: whether it is food, safety, hygiene, social interaction… and money too. Put money in parenting perspective and turn daily life situations into learning opportunities. …Start when they are young! Marketing and advertising target and “educate” them into consumers very early on.
      
Under 5:

• Be consistent: give presents only for specific occasions (holidays, birthdays, birth of sibling…).
• Say no… they will learn a lot.
• Re-use and recycle … don’t rush to buy new things each time.
• Take them with you when you go shopping and talk aloud to explain your choices: I don’t need this, this is not on my list, this is too expensive, etc…
• Don’t confuse things and love: give them of yourself (your time, your attention): make them feel special… this is what they really need.

6 to 10:

• Track your expenses and write your budget at a time and place where your children can see you do it. They will consider tracking and budgeting as normal things to do.
• Give them small errands to do: buying food, or small things: give them a list and entrust them with the amount. Ask them to track what they have spent and give you back the change. As they get used to it, ask them how much they need before buying these items. It will help them develop a sense of prices. If they buy things which are not on the list, ask them why. Show them that it will be less money to buy something else (say what).
• If they ask for big items (bike…), inquire with them on the different prices and options, and how much you have to save every month before you can buy it.

12 and older:

• Involve them into financial decisions and daily spending by entrusting them with some of your family money – not pocket money (they may only spend it on unnecessary items and they won’t learn much) – but necessary expenses like school books, stationery or food.
• As they get older, gradually shift more financial responsibility to them. For example, decide (look at your budget first) on an amount for their clothes or their phone (if they have one) and let them manage it. Give clear rules and follow them: if they have spent their monthly clothes budget… in two days, too bad – they will have to wait until next month. They will learn the consequences of overspending and that money is limited. Here are other examples of expenses you can entrust them to manage:
  • going back to school budget (stationery, books…),
  • food budget,
  • holidays (New Year/ Christmas/ Eid…),
  • presents for friends…
• Give them a fixed amount (according to your own budget) and let them manage it. They will learn how to take decisions and stay within a budget.
• Involve them in bigger decisions like how to finance their studies, how it impacts the other siblings, encourage them to work… but keep studying a priority. Help them find out what career they could do.
• Be a role model: show them how you list future expenses, inquire on various options, and stick to your plan.
• Make time for your children and express love… don’t make up for your lack of time by buying them things. Read books, take them for a walk, play with them… listen to them -fully.
• Encourage good values (honesty, not showing off, trust, responsibility…) and positive attitude about money: money is a tool helping us in life, not a goal. For example, before a holiday, discuss the meaning of the holiday … so that they don’t think holidays only mean heaps of presents and sweets. Include non-material presents, giving to others…