The school holidays provide a perfect opportunity to help your children to be financially responsible and independent. Here’s some ideas for things you can do:
- Start with the language you use around money. Make sure it is always positively framed and encourages them. Talk about subjects such as compounding interest, the cost of debt and credit cards, the effect of changes in mortgage interest rates, the choices provided by education and careers, and the effects of redundancy. For younger ones point out the cost of takeaways, seasonal foods compared with out of season foods, the comparative cost of toys etc.
- Give them opportunities to be responsible – this may be by looking after a pet, cooking dinner (start with a simple scone base pizza with tinned spaghetti and cheese), keeping their room tidy or having a regular part time job where turning up and being on time is essential. These set habits, create skills and lead to financially responsible children.
- Pay them for jobs – don’t just give them an allowance. Paying a monetary reward for effort helps them understand the value of money; in the real world we don’t receive money for nothing and this is a good lesson to learn early on. Jobs may be one-offs such as helping with a spring clean throughout the house these holidays or doing regular jobs such as clearing the dishwasher, putting out the rubbish and recycling, mowing the lawns, cleaning the bathrooms, vacuuming, cooking dinner, painting or water-blasting the fence etc. Pay them appropriately for the jobs they do and let them enjoy choosing how to spend their money.
- Don’t confuse paid jobs with household chores – of course everyone still needs to do their bit around the house such as making their bed, keeping their room tidy, cleaning up after themselves, and setting the table and clearing dishes.
- Encourage them to get a part time job. They may be able to do other work for you especially if you own your own business. For example they may be able to do data entry, compiling and packing orders, delivering fliers, cleaning the office, social media etc. Or you may have friends who have businesses that they can do paid work for. Encourage initiative to write an ad for a community noticeboard or at the supermarket offering services around the office, babysitting, dog walking, mowing lawns etc. Or encourage them to apply for part time work at the local supermarket or other nearby shops. Help them prepare a CV outlining their achievements and skills. Employers will value their voluntary work and sports team contributions as much as their academic achievements.
- Allow them to make purchasing decisions – this may be in the form of an annual clothing or transport allowance so that instead of you buying clothes for them, they can allocate the clothing allowance how they want. They may choose not to buy many clothes at all or just a few expensive pieces. When our children reached secondary school we provided them with clothing and transport allowances but we still paid for school and sports uniforms. We found school socks were worn with everything and their bikes used more often and one of our sons also used part of his clothing allowance plus some other savings to buy a laptop.
- Role model saving – this comes in several parts. Show them by example that money can be saved by keeping fit and eating healthily. Allow them to cook their own food and make their own lunches, plant some vegetables, tend and watch them grow. For almost instant results toss some alfalfa or broccoli seeds onto a meat tray lined with a water- soaked paper towel, and then water daily. Encourage them to save some of the money they earn – help them set savings goals – but as with all goal setting make sure the goals are achievable. Savings may be put into a piggy bank or their own bank account or, for longer term investment, a Sharesies account. Let them watch the money grow.
- Play Snakes and Ladders and Monopoly. Snakes and Ladders reinforces the notion of sometimes things not going according to plan. Monopoly entrenches notions about relative costs, and the relationship between assets and income – but maybe put a time limit on it so it doesn’t end in tears. Older children may also be interested in playing a game of working out how much it will cost them to go flatting using TradeMe to cost out weekly rents, the cost of a bed and other furniture, weekly shopping, power etc.
- Giving and serving – this needn’t be money but could be time such as baking for a neighbour, offering to do some jobs for an elderly neighbour or relative, becoming involved with scouts, guides (or their younger counterparts), or St Johns. This helps create purpose for children.
- Above all avoid creating economic dependents. These are the children who have always been provided for financially and who will be expecting mum and dad to help them out financially throughout their lives and then leave them a healthy inheritance. If they have a partner the partner may also be sharing in the benefits but may not be around for long. If you have had a difficult life financially then it’s understandable that you will want to help your children so that life is easier for them, but remember, with all actions there are consequences.
So, if you want to raise financially independent and capable children, be conscious about using positive language around money and give your children every opportunity to earn their own money so they can start taking responsibility for their financial decisions. The school holidays may be the opportunity to get a lot done around the house and the start of creating financially responsible children.
The information in this blog does not purport to be financial advice and no reliance should be placed on it. It is of a general nature only based on my experience as a Chartered Accountant in practice and specific advice should be sought for your particular situation.