Financial Fluency - Teaching Children About money

Financial Fluency – Teaching children about money

It is a widely held belief that the earlier children learn a foreign language, the quicker they will be able to pick it up and achieve fluency. The same is also true when it comes to teaching children about money and developing financial fluency. Teaching children from an early age how to save and budget in a fun and educational way can lay the foundations for sound money management later in life. A University of Minnesota study indicates that with as little as 10 hours of financial education, teachers and parents can positively affect children’s future saving and spending habits.

A good place to start teaching children about money is by demonstrating that money is used in exchange for goods and services, showing them that in making their own purchases they are in fact trading with the shop owner and receiving the product in exchange.
As an example, next time you are shopping, try to have the exact change for the product and give it to your child. Let your child hand over the money to the cashier and after you have left the shop, have a chat about how the money paid for the item. It is important to always approach teaching children about money with openness and honesty, giving a constant and clear message. Explain to them why they can or cannot have certain items they wish to buy. You can’t always say yes to a request for money and if it has to be a no, it does few favours being over indulgent, but equally the ‘because I said so’ clause has little educational merit.

Before long your child will have a basic understanding of money. When this happens you may wish to start explaining the bigger picture. You might consider showing children how the whole family benefits from money via a visit to the supermarket. Once there pick out two similar products, perhaps a well known brand and an own label and allow the child to make the choice. If they choose the supermarket’s own brand, allow them to make a further purchase with the saved money. This might be a useful starting point for a discussion about value vs. price.

Consider also the type of signals about money that your child picks up on. You may feel it's important to let your child know family money matters are private, and not for discussion outside the home. If however, as parents you talk in hushed tones over bills and bank statements, your child may deduce that finances are something to be secretive and furtive about. Similarly, if they pick up some stress and anxiety over money, this too is a value that can be carried forward into adult life.

7 tips to help teach children about money

1) Fun, fun, fun - make a game of both saving and spending. If only spending money is fun then they will not associate any pleasure with saving.

2) Routines - When they receive money as presents or from the tooth fairy establish a routine, like putting some or all of it in their piggy bank or savings account. They will most likely take these traditions forward into their own families.

3) Consistency - If you pay pocket money in return for helping around the house make sure they actually do the work. Even very young children can be responsible for tidying away their own toys or clothes. It’s a good idea to pay a set amount on a regular day but encourage their entrepreneurial side by giving them the opportunity to earn more if they seek it.

4) Look after the pennies - Turning off the lights, saving their pennies and giving small donations to charity collections are small things that they can do to create positive habits which may last a lifetime. Ensure that you explain why you are doing it and what the benefits are. Charitable giving can illustrate to your child that there are others less fortunate and introduce the idea to be grateful that they have more than enough.

5) Consequences - When your children ask for something, rather than say no. Ask them if they would like to buy it from their own money and explain what the consequences are. You may find that they are more reluctant to spend their own money than they are yours!

6) Praise, praise, praise - We may learn by our mistakes but by praising we reinforce positive behaviour and will encourage children to do the right thing out of choice ‘because it feels good’. This can be applied to saving, spending wisely and giving to charity.

7) Spend and save - when your children are receiving pocket money, teach them to save either some or all of it. It is always a good idea to let them spend a little however, as this encourages a work-like mind which will set them in good stead later in life.


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The Importance of Multiple Streams of Income

Multiple streams of incomeFinancial SuccessPosted by Daniel Britton Sat, April 04, 2009 17:07:41
Have you ever considered that many of the world’s most successful people invest thousands of pounds, dollars or equivalent, plus countless hours on personal development and education? Did the success precede the investment or did the investment precede the success?
America’s foremost business philosopher, Jim Rohn advises that we should spend more time on developing ourselves than we do on developing our business or career.

The traditional model of studying hard in school, specialising and following a career has been espoused and followed, largely without question for the past few generations. As children we may have had dreams of being astronauts, sports stars, singers, artists and the like, yet we are persuaded to discount these dreams and talents as foolish childish fantasies and encouraged down the well trodden paths of conforming and security. But where do these paths actually lead? The promised land of milk and honey? I don’t think so, certainly not in the majority of cases and certainly not in these most uncertain of times.

We are encouraged by parents, teachers and other well meaning influences to stay in school and get the best education we can. This system serves to filter us into colleges, universities and hopefully well paid careers. We then earn, spend, earn a bit more and spend a bit more. After all, don’t we deserve a few of life’s luxuries? All that study, the long hours, hard work and delayed gratification? So that new notebook computer or widescreen TV is more a reward than an indulgence, more a necessity than a luxury. So too cars, we want the best we can afford, it’s more cost effective is it not to finance a new model rather than risk the associated repair costs or an older one. So it begins the earn-spend-borrow-repay lifestyle cycle which has ensnared so many of us in the western world.

Teaching children about money is an important topic and it is never to early to start.
Robert Allen, best-selling author, likens the lifestyle cycle in which many of us are trapped to walking up a downwards escalator. You have to keep walking just to keep still and if you should ever stop, the moving staircase will take you right back to where you started, i.e. the bottom. Or even worse, the basement.

I apologise for painting a bleak picture but maybe we all need a little reality check now and again. But what is the answer, how can we get ahead, switch off the escalator or ultimately turn it in our direction?

In the short term the answer is to spend less than you earn not very exciting but this alone will ensure that every two steps will result in only one step down. By frugally saving and investing relatively small amounts on a regular basis many people have achieved financial freedom and reached the top of their personal escalators.

Spend less and save more – it’s hardly going to get your pulse racing and have you tearing down to the bank to open a savings account especially with interest rates hovering around zero. But it’s a start, an intention, the beginning of a good habit.

To turn the tide in your favour you really need to think about generating additional or multiple streams of income. Think about it, how would you like to generate a steady, regular stream of money coming into your account every week? Not from an extra job or additional hours but simple proven systems that with a little initial effort will add up to a major impact on your life for now and the future. So are y9ou with me, are you excited by the potential here? Imagine a financially free future where you choose to work only when and where and crucially doing what you want to do. Maybe a chance to rediscover the childish fantasies or spend your time in the service of others or for a greater good. After all without the wasted energy and time of negotiating the downward moving staircase you are free to focus on the other goals and areas of your life.

So how then do we reach this desired state, this nirvana?
JD Rockefeller was quoted as saying “I have ways of making money that you know nothing of”.
Earlier I mentioned bestselling author, Robert Allen – his outstanding book ‘Multiple Streams of Income’ explains 12 simple proven methods to begin to turn the tide and the escalator in your favour. Without doubt it is one of the most impactful books I have read in the past decade and cannot recommend it highly enough.
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