Make talking about money normal
02 Jul 2020
"Money does not grow on trees" or "I don't have money" are some of the quick answers you will often hear parents give to children at the shops when children try to negotiate items that were not on the shopping list. With those few words, the door closes on the possibilities of a deeper conversation between parents and children about money, explaining the importance of sticking to a budget or prioritising needs over wants. This can lead to young people entering the world of work without information and guidance on how to manage personal finances or break bad money habits.
According to an article on
Forbes.com, many of us have experienced anxiety, shame or embarrassment when there is even a risk of having to talk about income, net worth and other money topics. This taboo on talking about money is, according to experts, harmful to our society and can lead to crippling mistakes in people's personal finances and conflict in families. With the Coronavirus pandemic decreasing economic activity, this too may result in the threat of income and job losses for many. It has therefore become increasing important to understand and disclose your financial circumstances to those in a position to help, should you need it.
Talking about money does not have to be a dreaded topic in your household. Here are some tips from Liberty's
Mind My Money financial education programme on how to start addressing the money 'elephant in the room' early on:
Delayed gratification: teach your kids that they have to wait to buy or have something they want. The demand for instant gratification can result in them being unprepared for the real world where you don't always get what you want immediately. It's also a good skill to create a sound financial mindset. Teach them that wants and needs are different.
Money is finite: kids need to understand that money is not like air and mud. If you give it away or spend it, there is no more left. Teach your kids to use spending jars and money boxes, to save up and make decisions about when to spend money and when they have to wait.
Teach them about compound interest: for older children in their pre-teens and teens, use a small amount of money (R10) to teach them how compound interest works. Tell them that the same R10 can grow to R100 for example, over time if left in a compounding account, because money earns interest on top of the interest during the period it is saved.
The goal is to create a space where talking about money is normal for your kids. Include them in your spending decisions around the home and help them to get an idea of what things cost, like the monthly television subscription. Do not get tired of repeating yourself; it's a process that is absorbed one day at a time. If you have not started having conversations about money with your kids, don't stress - what matters is that you start now.
Start small - start by simply encouraging everyone to start writing down what you all spend each week, either on the phone bill, food or a computer programme - there are a number of useful programmes which can be found through popular search engines. Use this information to draft a simple budget looking at the money that is available, and then having frank conversations with your kids about what is possible and what is not.