I’m just going to come right out and say it, I’m rubbish with money. I get the whole ‘burning a hole in my pocket’ thing when I have more money than we need for bills and life. It takes a whole lot of will power for me not to go shopping and blow any extra money on things we don’t need. Over the years though, especially since having children and money has been tight, I’ve tried to be more organised with money and more careful with what I’m spending. I think it is important to teach children to have a good attitude and knowledge base surrounding money so when they grow into adults they are better equipped to make sensible decisions with their money. Although many of us may not like it to be the case, you can’t really function as an adult without money and it’s best if you are able to keep your finances in check. I’m no Martin Lewis, I’m not a money saving expert but I would like to teach my children the lessons I have learnt about money. I’m still learning myself but I think these 5 lessons can be introduced to children to help them develop a healthy relationship with money when they become adults.
5 lessons I want to teach my children about money
1. You don’t need to buy everything – Want and need are two very different things and while it is perfectly fine to want new things, it’s important to remember you shouldn’t do so at the expense of things you need. Leo is 6 so at the moment he wants everything! Advertising works very well on him and if he sees it on the TV then he wants it. I want him to know as he grows up that he is allowed to want things and to buy things but only if he has the spare money to do so. You should never jeopardise the money you have for rent because you fancy buying a new tv, for example.
2. Save – I don’t have savings but I really wish I did. Most people I know have a pot of money somewhere, a savings bank account or a literal pot of money, that they add a little to each month and keep for emergencies. I never started any savings and we have been in lots of situations where having an extra stash of money would have come in really useful (my car fails it’s MOT a lot, that’s all I need to say really!). As soon as the children start getting money, be it through birthdays or a part time job when they’re older, I want them to be aware of the benefits of saving. ISA’s like the Wealthify stocks and shares ISA are perfect for savings as you end up with more money than you put in.
3. Avoid credit cards – Credit cards became a necessary evil to us a few years ago and we are still paying the price, quite literally, for them now. Getting a credit card is like doing a deal with the devil, it feels wonderful until the monthly repayments come back to bite you and the interest rates get added on. Like I said, sometimes you may find yourself in a position when a credit card is your only option but I will be encouraging my kids not get one unless absolutely necessary. The situations where we’ve needed credit cards could have easily been solved without us getting into debt if we had money in savings to fall back on.
4. Know your outgoings and income and budget accordingly – It’s important to know exactly how much money you have in order to avoid overspending. I have found the best way to keep organised with my finances is to write down all my money coming in and all my money going out for the month. Having it all written out in front of me helps me to see what money is left over for spending and any emergencies each month. Also, knowing exactly how much money I have helps me to budget for things like the food shop, days out and petrol. I can’t say it’s the most fun activity but it does help me keep on top of things. I also use a mobile banking app so I can check in on my bank account as often as I feel I need to. No one wants to be paying unnecessary overdraft charges when it can easily be avoided by a bit of budgeting.
5. Money isn’t everything – This, I feel, is the most important lesson I want my children to learn. There is no avoiding the truth that being wealthy makes certain aspects of life a lot easier than when finances are tight. BUT just because you can afford a mortgage doesn’t mean you will be completely content in life. Just because the car in the drive of the house you own is a top of the range sports car, that doesn’t equate to total happiness. There is so much more to life than things; a loving family, friends, beautiful nature, falling in love, laughter and so many other things can bring you more satisfaction than money ever could. I want my children to know that having a rich and fulfilling life doesn’t mean you need to be rich. Money helps make life easier but it really isn’t everything, money can’t buy you happiness after all.
What lessons do you want to teach your children about money and managing their finances?