Charlie Bartlett | Hallbar Group Capital
According to research, one of the primary obstacles hindering children from acquiring sound financial skills is their parents.
According to research, one of the primary obstacles hindering children from acquiring sound financial skills is their parents.
“Generation Y has observed their parents grappling with credit card debt and have noticed that budgeting is not practiced by them,” states Charlie Bartlett, Fixed Income Advisor at Hallbar Group Capital.
He says that any lessons on saving are often ignored if children witness their parents indulging in excessive credit spending and subsequently struggling with repayments.
“The reality is, if parents are instructing their children to save for that essential toy, they should also be saving for that essential plasma TV.”
Pocket Money
Whether given as compensation for chores or without any conditions, Charlie, asserts that pocket money allows children to learn the value of saving and fosters a sense of independence. It also illustrates the significance of effective money management.
“It is important to remember that experiencing financial loss is a part of the learning process that most children encounter to become more prudent in the future,” remarks Bartlett.
Charge board
Paying board has become less popular but it can be a powerful education tool once an older child starts earning a wage while still living at home.
Parents have the option of putting board money aside for a house deposit when the child is ready to buy their own home.
Talk about it
Money can often be a taboo subject when mixing socially but it should not be that way in the home. Mr Bartlett says it is important to talk about money with your child.
“Children often see adults spending money but the part they don’t see is when monthly bills are paid off,” Bartlett says.
“It helps to sit children down when you are doing your financial chores and show them what bills are being paid and how much they cost.”
Set goals
Children should be encouraged to think long term, Mr Bartlett says. “This will motivate them to see the bigger picture.”
Goal-setting is a key financial tool for adults too. Small sacrifices can deliver big results over the long term.
Starting a child’s investment with the $4000 maternity payment and adding $20 a week will grow it to more than $75,000 by the time they are 18. This assumes annual investment growth of 10 per cent.
Go shopping
Mr Bartlett says children should be involved in identifying grocery items and how much things cost.
“Children can get very excited when they see something they really want. We’ve all seen a child throwing a tantrum at the supermarket.
“Talk to your child and explain that if they really want something, they will have to wait. Put a time frame on it – for example two weeks. This teaches your child to think properly before making a purchase. Once the child has set their heart on something, teach them how to shop around to find the best price.”
Make it fun
Whether it’s family games of Monopoly or setting up a star chart system for financial rewards, money does not have to be boring.
For younger children books such as Alexander, Who Used to be Rich Last Sunday (Aladdin Publishing) can also be a fun way for them to learn by example.
Choose wisely
“Ideally, you should look for a children’s account which has no transaction or account-keeping fees and, at the same time, pays reasonable interest,” Charlie says.
“Some children’s bank accounts reward children with bonus interest if they make at least one deposit and no withdrawals in a month.
“This is to encourage savings and to help children develop good financial habits.”
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