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How to speak to children about money

by | Jun 5, 2020 | Personal Finance

Here are a few tips on dealing with your money and your children:

 

Don’t be reluctant to discuss financial issues with children

Children are very much aware of what is happening around them. Rather have open, frank discussions about household finances with them, than have them make up scenarios in their head.

Don’t sugar-coat things

They don’t need to know exactly how much you earn, but they should be made aware of how much money is spent on necessities like the roof over their heads, school fees, food, electricity and transport. Let them know how much debt needs to be paid. If the household is struggling, tell them about it, so that they too can change their lifestyle and mindset – and try and help the situation.

Don’t underestimate your children’s intelligence

Children are clever and learn from what they see. If they can interact via a cellphone, then they can transact via money. Take them with you when going to banks, ATM’s and when you pay with your cards.

Teach them the difference between wants and needs

Children sometimes have a huge sense of entitlement and are oblivious to what is a necessity that they need and a luxury that they want. It is our jobs as parents to educate them on this.
Hulle kannie net alles wil he wat hulle oe sien nie!

Teach them that cash is king

Not all debt is bad, but debt can spiral out of control very quickly. If you are already in debt, discuss with them the cost-cutting measures you are going to take as a family get rid of that debt. Encourage them to avoid becoming over-indebted by saving and paying cash for goods as far as they can.

Don’t let children traumatize and torment you with excessive demands

You are the parent. Don’t put yourself into debt to appease a child who makes demands for name- brands and unnecessary things. You will end up suffering and having to literally pay for the consequences.

Charnel Ernstzen, Managing Director of National Debt Advisors weighs in: “ Living in an over-indebted household not only causes financial distress, it also causes emotional distress. At NDA, we see too many families torn apart because they haven’t learnt to speak about money – and end up looking for solutions when it is too late.”

In my personal opinion, the South African government should be spending more on financial literacy and doing more to see that our people and our youth are educated. We find youngsters leaving matric, gaining employment at R5000 a month – and then immediately having debt repayments of R4000 a month. It’s crazy!

As parents, we have change our mindset and culture around saving, debt and money on the whole – and we have to encourage our children to do the same.

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