Confession: I grew up in a household that struggled financially. We weren’t ‘poor’ poor. I never remember going without a meal, we always had a roof over our heads and I always had clothes (albeit mostly sourced second-hand or from Kmart).
But we struggled. My parents lived pay cheque to pay cheque, often running out of cheque before they ran out of month.
We moved frequently between rental homes and my dad filed for bankruptcy more than once. Basically, the lesson my childhood taught me was: money problems are the root of all conflict. Ergo, make sure you always have enough money, and you’ll always be able to minimise conflict. Easy!
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This is how most people get their financial education: through their lived experience.
My partner had the absolute opposite experience to me and grew up in an abundant household. This led to an early adulthood littered with foolish money decisions; having never known the pain of “going without” or experiencing the fallout of tight finances, why would you be careful with your own income?
In my circumstances, I learnt to be incredibly thrifty and careful with my money, which led to me owning my own car outright by 18, and buying my first house at 21. Though I’m not angry at these results, I’m not thrilled about what I had to go through to get them!
Which brings me to my point: wouldn’t it be ideal if we could teach our children how to manage money with a clear financial education, rather than throwing them to the adulthood wolves and hoping they figure it out on their own?!
This is precisely what money expert Jim Brown aims to do. For more than 30 years, he’s worked as an auditor, investor, tax specialist and financial consultant – and this is his advice for parents who wish to raise financially responsible and thriving adults:
Don’t freely give your kids money.
“One of the biggest mistakes I see parents making is offering unlimited funds to their children for non-essentials,” he says.
“The consequences of giving your children unlimited funds for discretionary spending – especially after they’ve used up their entire allowance – aren’t realised by most parents until much later. Children of parents who do this may develop the habit of relying on additional funding sources that can be quite costly, such as high-interest credit cards.”
Money lessons start young, he adds – as young as six.
“We gave [our kids] $6 per week and increased the amount by $1 each year as they got older. They could earn more if they did something good that week, like offer to help someone or ace a math test,” Brown shares.
Sounds like a solid place to start on a lifetime of financial learning.