BY WILLY WILSON
ARE YOU a parent dealing with children who demand a weekly allowance of RM300? Do you have questions about what you should be teaching your kids when it comes to money? Well, you are not alone.
Across the globe, children have become the most profitable market for global merchandisers. The relentless exposure to television and the Internet has contributed to the consumptive behaviors of our children.
The question here is how to teach children to be a wise consumer. And more importantly, how do we teach them to be financially responsible individuals? But before we attempt to answer these questions, it is perhaps wise to reflect if we, as parents, have set a good example in managing money. The “young parents” generation may have financial missteps, but preventing our kids from making the same mistakes is our responsibility.
Estella Loar, the author of Teach Your Children about Money, points out that children learn about money mainly through observation and examples set by their parents. Loar says a parent’s attitude towards money determines their children’s spending and saving habits.
The good news is that reassessing your own finances while teaching your children about money management in the process is possible. Educating children about money management begins at home. As parents,you must first be aware of your saving and spending habit. According to Loar, if you reckon that you and your spouse haven’t been good money managers, then buckle up and inform your children about your intention to be wiser
Use concrete terms when discussing money with them. In other words, communicate in the language that they would understand. For example, when they ask how much money you make, what they really want to know is why they can’t buy a iPod or computer game.In such a situation, the ideal answer is that you have enough money to pay for their food, clothes, education and future needs, but not for an iPod. Of course, the hard part is urging them to put off the instant gratification of buying what they want, whenever they want. But by doing this, you instill the most basic approach to handling money: do not spend what you do not have. The point is to make them understand that there are priorities when it comes to money management.
Child psychologist Dr Lee Kuan Shin of Centre for Effective Living says parents should show consistency when teaching their children about money management. So if you tell them that they can’t have a particular toy or gadget, then you shouldn’t indulge in a new pair of shoes either.Lee says it is crucial for parents to show
consistency in terms of value, belief and attitude towards money, as inconsistency in this case could potentially train children to be manipulative.
For example, if you are more lenient about money than your spouse, it is only natural that your children would turn to you (perhaps without even telling your spouse) when they need money. Therefore, Lee says, you and
your spouse should create a strong set of values unique to your own family. You and your spouse must set financial priorities according to your family’s financial capability. Only then will you succeed in establishing a consistent approach to teach your children about money.
Children’s curiosity about money develops as they get older. Therefore, your method of teaching must be more strategic as they become active consumers. Get them involved in your weekly grocery shopping, and let them see how you make your purchasing decision. For instance, you can tell them that instead of buying your favourite soft drinks, you would rather buy milk because it is healthier. Such activity, according to Loar, is effective in teaching them about setting priorities. You can also introduce them to the concept of saving, spending, ownership and interest by playing games such as Monopoly Junior edition.
2bz4money: I use Catur Bestari to teach my children on money management.