Are your kids finance savvy? Does your family do pocket money? How do your children manage their money?
Why is the Declutter Queen talking about money you might wonder? Well all areas in life can be simplified and decluttered, including your finances. While this is not my area of speciality, it’s an area I’m passionate about, skilled in and asked about often from those close to me and clients alike.
I’m not going to offer financial advice, so much as suggest areas for you to look into. Specifically today, in the area of children and finances. I’m passionate about raising a generation of financially literate and responsible children who understand the power and limit of money and also can confidently manage the money they have in their possession.
Pocket money: if your family does pocket money I believe it’s important for young people to learn that money that comes into their hands can’t all just be spent on ‘want’ items. So… in our family we always set aside 10% of what we earn for giving. We have taught our children to do this also, as we believe it’s a great principle for everyone to do. The children then have the responsibility and joy of deciding who/ what organisation to donate this to. I hope this is a habit they will maintain as they grow up and they’re dealing with more than just gold coins!
Savings: we also teach our children that when they earn or receive money that it’s wise to save some of their money. We suggest a minimum of 10% for our children, but they often choose to save up to 80% because they understand the power of saving up to buy something, compound interest and making wise choices on what they spend their money on.
I’ve explained to my children (when they were about 5 years old) how compound interest works, set up online banking for them and at the beginning of each month we log into their accounts together, bank any money they have as well as check out how much interest they’ve earnt (which for them is ‘free money’ and they LOVE it!)
Spending: many adults have trouble regulating their own spending so naturally struggle to teach their children skills needed to make wise purchases. One lesson I’m pretty strict on is that they are never allowed to use credit. Now obviously children aren’t allowed credit cards but you’d be surprised how many parents lend their children money so they don’t have to wait to make purchases they’re wanting to buy. I believe we need to teach our children patience when it comes to big purchases and that if they don’t have enough money to buy something they want they either need to wait while they save or settle that they can’t have what they want. Our rule is that if you can’t afford to pay with cash, you can’t afford it (that rule applies to us adults as well as children in our family).
I hope those little tips from our family to yours will help you simplify finances for your children.
Enjoy the Freedom!