Wednesday 29 March 2017
You may have heard that this week is Global Money Week, which is all about inspiring kids to learn about money, saving and setting themselves up for a ship-shape financial future.
Research shows that by their 7th birthday, kids have already formed money habits that they could carry through to the rest of their lives - so it’s never too early to start teaching good habits. And it’s never too early for your own bad money habits (don’t worry, we all have them) to start rubbing off on impressionable young spenders.
So here at Mozo, we thought we’d collect some of the worst possible money habits you could be unknowingly passing along to your kids - and how to break them.
All parents have been there: you're at the checkout and your little one begs and pleads for some novelty toy (they keep them near the registers for a reason, you know.) But the problem with giving in and adding that impulse buy to the trolley is, your kids may struggle to learn the value of savings, or even earning their own money.
Break the habit: You’ll have to develop a thick skin to stay strong in the face of tantrums at the checkout - a skill all parents need to learn at some point. Instead of caving to impulse buys, help your kids to plan bigger savings goals and work toward them. Maybe they want a new video game, or a book, or a doll. Teach them that it can be far more satisfying to score a really great toy after saving up for it.
Doling out allowance is a tried and true method of motivating even the most difficult of kids to help out with chores. But between wrestling them into bed on time and all your own household chores, sometimes there aren’t enough hours in the day to check that the bin is taken out, the dishwasher has been loaded and their room is clean. It’s so much simpler to just give out pocketmoney whether the chores get done or not, right? But if you do, your kids may not fully appreciate the link between money and hard work.
Break the habit: There are heaps of ways to establish a pocket money system that teaches children the value of work. Here’s one you can try: keep a chart of household chores and how many dollars you’re willing to pony up for each one on the fridge. Let kids be in control of how much they earn, by deciding how many chores they do - that way they’ll know that you get paid for the work you do, and not for what you don’t.
How easy is it to whip out your credit card to pay for everything from lunch box snacks to nappies? While it might be convenient, the habit can rub off on them more easily than you might think - the childhood equivalent of a credit card is having mum and dad buy whatever they want, even if they’ve blown their allowance already.
Break the habit: Seeing your money dwindling as you spend is a good way to drive home the impact of spending (for kids and sometimes adults, too). So before you hit the shops, hit the ATM (take your debit card - using a credit card will mean you pay way too much interest to make it worth it.) Take out the amount of money you’re willing to spend on that shopping trip, and explain to your kids that when you use your card, this is what you’re really spending - and it doesn’t just appear from a hole in the wall, it comes from your hard work and savings.
On the other hand, instilling your kids with a fear of debt only rivalled by the heebie-jeebies brought on by the bogeyman isn’t much better. Nobody likes being in debt, and it can be hard not to let this attitude rub off on kids, especially if you’re anxious about making repayments yourself. But if your children are too nervous about debt to ever use credit, they may miss out on building up a good credit score later on in life, which can hold them back from things like a car loan or mortgage.
Break the habit: Take out your credit card statement, and explain the difference between good debt and bad debt (if you’re not sure where to start, it might be time to brush up on your own credit card savvy.) Teach your munchkins that a credit card isn’t scary - as long as you use it responsibly and pay off your balance each and every month.
When little ears are present, it’s tempting to avoid talking about the family budget or how much money you earn - especially if things are tight. You might do it with only the best intentions, but keeping quiet about your money situation can not only mean your children don’t get experience dealing with money, but it also puts the idea in their head that money is some big secret, which might stop them from seeking financial help if they need it further down the track.
Break the habit: Next time they are pestering you about the next trendy, must-have gadget, instead of brushing them off or simply saying you “can’t afford it,” sit down and explain to them how you set your budget for the month, and why that particular spend isn’t included in it. It’ll be a valuable life lesson, and your kids will appreciate being trusted to understand such a grownup idea.
One great habit to make sure your children learn is picking the best savings account to grow their pocket money. Check out our savings account comparison tool to search for some of the best kids accounts on the market.