Money and Kids: The game of winning money can become all the more harder when you factor in having kids, so how do you plant the right DNA within them to set them up to be reach the goal of financial freedom?
It all starts with your financial DNA
Truth be told – having kids is not easy. Especially when you are trying to teach them to have a good relationship with money from an early age. Money and kids can spell disaster if you haven’t planned properly for it. The decision to support them fully, maybe give them pocket money or simply let them fend for themselves is arguable amongst varying families.
As host Andrew Baxter highlights, the example we give our kids through our own relationship with money serves as a DNA plant, often determining their future habits. If you want to learn more about YOUR financial DNA, check out My Financial DNA. It is true that history does have a tendency to repeat itself.
How and where you chose to spend your money can leave you in vastly different financial positions. As we all know, having savings for both safety and for investing is the smart way to play your income game, getting your money to work harder for you. (For tips on how to allocate your money properly, check out Andrew’s first podcast: Asset Allocation – where to put your money).
Spending less than what you earn may seem trivial to most, but is one of the biggest problems facing modern-day Australian families. By teaching our kids to both save and budget from an early age, their money can start working harder much quicker than yours did. This ultimately sets them up for financial success in the long-term.
Pocket money or child-welfare?
If you find your kids week in and week out, asking for money without doing anything for it – be careful because you may be teaching them to fail. We all live in the real-world therefore all know that money for nothing simply doesn’t exist. So the question to follow, why do that for our kids? Therefore it is important to teach them that money just doesn’t grow on the bank of mum and dad. That being said, pocket money in exchange for chores and good behaviour will help them see that hard work equals good rewards. It will also make them feel both independent and appreciated.money and kids
When it comes to money and kids, the balance can be difficult. If your child is too young to get a job but you are still looking to teach them the value of money – incentivising them for actually doing something beneficial may be the better way to go. For example, rewarding your kids for reading a book or doing house-hold chores are a betters ways to make them earn their cash. Plus, who wouldn’t like their windows cleaned or lawn mowed – especially when it teaches kids that money has an inherent value.
Co-host Mitch Olarenshaw shares his childhood experience where he was remunerated for getting A’s on his report card by his parents – no wonder he is so smart today!
Support their dreams – don’t steal them
There is no doubt that we want our kids to have dreams in life, especially some strong aspirations in a money sense. However, by spoon feeding our kids these dreams of cars, toys or other things that they probably don’t necessarily need, you may be stealing their drive and their hunger to do well. You always want what you can’t have, so by giving your child a Range Rover at 17 years old may teach them poor a work ethic. Especially given that they already have everything – there is nothing to work for.
As Andrew Baxter highlights, it is about creating a solid unit within your family that has strong values surrounding work ethic and money. By teaching our kids a balance between hard-work and reward from an early age is what he believes to be the strategy to set your kids up for financial success. Who knows – maybe one day they will be able to manage their money better than what you do.