Teaching Kids about Finances

This week the Federal Government will launch a new initiative and resources to help primary school teachers deliver financial education programmes in schools.

Here’s a link to the website: http://teaching.moneysmart.gov.au/

Robert Kiyosaki’s book ‘Rich Dad, Poor Dad’ aptly posed the dilemma of his highly educated father who nonetheless had no financial education and consequently struggled financially (if I can para-phrase). While money can’t buy happiness, we’re all aware of examples where poor control of money and finances can cause much emotional stress.

As a financial advisor married to a primary school teacher we both welcome any initiatives which aim to educate children on the why’s and how’s of responsible financial management. Not surprisingly we’ve both thought and talked long and hard about how to do this. So here are a couple of suggestions that I offer:

  1. Financial, like all education starts at home. I don’t think any child is too young to start acquiring financial knowledge. It starts with the dinner conversations that they absorb from a very early age. Share your goals and aspirations with your children early. Explain the financial implications of these decisions and the lifestyle implications of financial decisions. Talk to them about your investments and how they work. Start simple, perhaps with how shops work, and slowly build the picture for them.
  2. Practice what you preach. Probably the best way to teach your children is by example (both good and bad). Planning, budgeting, saving and investing are all great things that your children can learn from you. Thankfully you don’t need to worry about teaching them about consumption and spending – society takes care of that. Help them rather to experience and be comfortable with delayed gratification for example.
  3. Start a savings account for them at an early age. At Christmas and birthdays have the discussion with them about how much of their money they will spend and how much they will save. You can encourage savings by having a clear longer term goal that they have for the money. Better still buy them some shares and explain to them that they will get dividends (regardless of whether the share price goes up or down). Something like Woolworths is a great share to explain to children how their investment relates to the real world.

Is there something that’s worked for you and your children or is there something we could do to help? As always I’m very keen to hear your thoughts and suggestions on the topic. Please email me at jmourelatos@prosolution.com.au or comment on this blog with your experiences or ideas.