A big part of raising kids is teaching them good habits. When you go to the toilet, flush and wash your hands. When you finish you meal, say thank you and bring the plate to the sink. When you wake before the sun’s up, either go back to sleep or wake your mother.
Once a year I’m invited to go to many of the local primary schools to talk to the year sevens about money.
I chat to them about how all this money business started, the different things people have tried using and why we have it at all. I also talk about the sorts of loans they might be introduced to when they leave school, like personal loans, although these days there’s a possibility they’ll be introduced to a government loan even before they finish their education (don’t get me started).
But the main thing I always stress to the kids is the importance of learning to save. It’s probably the most important financial life skill they can learn while they’re young.
‘Why?’ let’s pretend you ask.
Because they can just as easily learn to spend.
“When you receive birthday and Christmas money,” I ask the kids, “if you always spend it all the first chance you get on drinks and packs of chips, what do you think you’ll do when you start work and get your first pay cheque?”
The answer, which every grade sevener can understand, is they’ll spend it.
And the second pay cheque? The third?
Obviously, the same.
Because that’s what they’ve always done.
And that’s what I did.
My first pay cheque bought me a stereo system the size of a small car. My second and subsequent pays fared no better, going on clothes, music and partying. And before I knew it I’d been working five years and had nothing but a pile of old records and fashion mistakes to show for it.
Worse than that, for all the music I owned I still had no rhythm!
Kids need to be taught to save. Telling them they should save isn’t enough. Telling them the importance of saving isn’t enough.
You can tell a kid they should make their bed all you like, but initially you just have to stand with them and show them the way.
That’s what we should all be doing with our kids – teaching them how to save.
Is it really as important as I’m making out?
Only if you want them to have the option of buying a house one day and having a chance at financial security. You know, the little things.
Not to mention the sense of well being which comes with not wondering how you’re going to pay for dental work or car repairs or afford (yes, it’s this important) your grandchildren.
I usually suggest to the year sevens they have two money boxes – one for spending, one for saving. Then work out a percentage split of any incoming money from birthdays, Christmas or chores and divvy it up the moment it comes in. Half and half is about as easy as you can get. This way they still get to spend some money on the fun stuff but also get in the habit of putting money aside.
And make them put it in themselves. Remember, it’s the habit we’re after here – the money itself is almost inconsequential. They’ll soon see how one of the piggy banks is building up and one is almost always empty.
Of course, once the savings piggy bank has built up enough you can take them into a credit union or bank to open an account. Most major financial institutions have a savings account made just for kids so this can be a great way to teach them about the magic of interest.
All it takes is the tiniest bit of effort on our behalf and in no time at all the kids will be teaching themselves a life skill which could mean the difference between living pay cheque to pay cheque or retiring early with enough money to build you a spacious granny flat.
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