If I had a dollar for every time I have been asked by a parent what to tell your kids about money, I’d be a millionaire. There are many different aspects of money management that you can and should tell your children about. Here are seven of the most important principles about money:
1. Money can be exchanged for goods or services
This is one of the first few lessons you should teach your children once they are old enough to understand - usually around the age of 3 years. Next time you go down to the corner store to buy one or two items, let your child hand over the money to the cashier. By doing so, he will gain greater appreciation of the concept of being able to exchange money for things that you want or need.
2. One should be careful with money
Some people seem to think that any coin under 50 cents is just too small in value that they simply tend to toss those coins into the bin during spring cleaning. What a waste! Encourage your child to be careful with all denominations of money, and show them how these coins in smaller value can add up to big money. Start with a family piggy bank and use the collection to fund small family outings like ice-cream treats.
3. Money has to be earned
There are many people in the world that don’t seem to have ever learned this lesson. They sit around at home and expect handouts to live, or turn to a life of crime to fund their existence. Be careful not to give your child money every time he asks without expecting anything in return. Help them to understand that money is to be earned by rewarding them monetarily upon completion of household chores.
4. Encourage purposeful money management
The exact proportions in which your child divides his money is up to each individual family to decide based on beliefs and needs of a child. This can quite easily be achieved by providing them with 3 piggy banks for different purposes: spending, saving and donating.
5. Avoid borrowing money wherever possible
It is always much harder to repay money that has been borrowed than to save your money. Some loans like home loans, are unavoidable though. A rule of thumb is that if you don’t have the cash to buy it, you can’t afford it!
6. Money isn’t your best friend so don’t let it control your life
Quite simply, try not to become so over-committed with your finances that you are forced to work 60 to 70 hours a week to maintain a certain lifestyle. If you do, then you are letting money control your life. You don’t need the fancy car (and car loan) or overseas holiday (and personal loan). All these things are nice, but only if you can easily afford them.
7. Show them how to budget
This is one of the most important skills to acquire and one that many people don’t seem to know how to approach. Recent surveys have shown that many people are spending 10% to 20% above their earnings. Although they may be earning enough to fund their lifestyle, failing to budget prudently leads to money wastage each week.
Ms Tracy Teng Mun Yee is an accountant by profession. She has passed her ACCA qualification and gained her ACCA fellowship during her 8 years of practical experienced working with multinational organizations.
Currently, she is engaged with Central Marketing Group (CMG) as a Finance Manager handling Internal Control division. Prior working with CMG, she was a Finance Team Lead with British American Tobacco Shared Service Centre (BAT). Besides that, she has also been working with Hewlett-Packard (HP) and Hauni Malaysia, a German based tobacco machinery manufacturer.
Looking at her diverse experience in Finance, she is able to share her thoughts with new parents and soon-to-be parents on family financial management on the aspect of family planning and household expenses management.
Although she is a mother of three young children, her biggest passion is blogging and sharing. More recently, she also a content manager of her own website (www.careermumsclub.com) promoting mumpreneurship to career mums. Her biggest wish is to support and aid as many mums as possible to achieve the best of both worlds – a fulfilling career to call their own, without sacrificing quality time spent with the family!