We know that it’s getting harder for each generation to get ahead financially and so, as parents, we must equip our children with tools to help them face the financial reality of life.
Hannah McQueen the founder of enableMe has written a book “Pocket Money to Property- How to Create Financially Independent Children “
Hannah talks about the conversations we need to have with our children at different ages:
Ages 5 to 9 years old – Introduce the basic concept of money, where it comes from and how to consciously spend it.
Create a job chart and list the various jobs and their dollar value.
Start paying pocket money for value based chores.
Ages 10 to 13 years old- Children need to start to take on financial responsibility. Help them to understand their financial personality. Start a living allowance – this is separate to pocket money – it is what you would spend on them anyway- ie mobile phones, clothes.
Stipulate what needs to be paid from this fund over that period and then review their spending with them every quarter. Let them make mistakes- if they spend their monthly clothes allowance on after school snacks – don’t give them extra money.
Ages 14 to 16 years old- Talk about why we earn money and how money allows us to live a certain lifestyle. Discuss the family finances and discuss whether you (the parents) are on track for retirement.
This is confronting , but whether you have done well or made mistakes – it is an learning opportunity for them. Teens should have a part time job, a spending plan and a savings goal.
Ages 16 to 18 years old- Talk about goal setting, talk about how taxes are paid and why and the effect of compound interest, especially around debt.
They need to understand and estimate the cost of study ie how much their student loan will be at the end of their study and to understand the relationship between time and money as it relates to debt.
Objectives to instil in them by the time they leave home are: to understand and master cashflow management, know their money personality, understand what life costs and what they need to earn, understand how to develop adaptability, agility and grit, know their weaknesses, know how to set and challenge goals.
As parents, we only want the best for our children. It is our responsibility to help our children by being good role models around money – having our own finances in order, making good financial decisions and being prepared for retirement (so we don’t end up living with our children !!) .
Dianne Barlow, Financial Personal Trainer , EnableMe- Botany South