Teaching your kids how to manage their finances is invaluable. Mom of three and CEO of the Money Savvy Brands Kathryn Main shares her insights.
As a parent you want your kids to thrive, becoming more independent at each milestone. But when’s the right time to talk to them about money? It’s now, according to CEO of the Money Savvy Brands Kathryn Main. “Social media influencers and their friends shouldn’t be a positive example and trusted guide to your children and their finances; that’s your job,” she says. A state of emergency has been declared and a lockdown implemented due to Covid-19. Businesses are struggling, salaries cut, jobs lost, and the economy has slowed considerably. What does this mean for you and your family? “Our kids learn from watching us manage our finances, even if we don’t discuss it with them directly,” says Kathryn. Here, she shares practical ways to teach your kids about money.
Get them involved
The best way to teach your kids about money is to show them what’s happening in the world and the impact that’s having on your expenses. Experience and knowledge are the best tools you can give your kids to equip them for the future – especially one as uncertain as ours. Make finances a family affair. With less cash coming into the household, it’s wise to revise your budgets. One of the best ways to cut back is to look at your variable expenses (can change) and consider how you can save money. Ask your kids to help you work on your budget. It’s a great time to talk to them about what expenses are and the differences between fixed (cost the same amout each month) and variable. Discuss your options for saving money with your kids and let them get involved in the process. Challenge them to find the best insurance deals for you online or to try to shave R1 000 off your food budget by planning your meals and shopping list.
Have honest conversations
Talk to your kids openly about reworking your family budget, and encourage them to be part of the conversation. Ask them what sacrifices they’re willing to make for the greater good of the family. Start talking to them about your family values and explain how they drive behaviour. Set financial goals as a family and put an action plan in place to meet them. That means that setting finance goals will come naturally to your kids when they’re adults.
Teach your kids to be independent
Show your kids how the economy has impacted your investments, explaining why the Rand is weakening. Encourage your kids to start thinking of ways to create an income for themselves. The best time to create new opportunities is during hard times. Ask your kids to come up with solutions to solve real problems you and people you know are facing right now. Now’s a good time to start introducing new concepts to your kids because they’re frequently online and have more time to learn new skills. Teaching your kids to think about how they can generate multiple income streams will set them up for success in the future. Gone are the days when we could rely on one source of income, so teach your kids how to start a side hustle, and how to manage the resulting income.
Introduce the concept of passive income
Use online sites such as easyequities. co.za to teach your kids how to invest and save their money via a tax-free savings account. Now more than ever, we should be teaching our kids the concept of saving and why we do it. As South Africa has endured a lockdown, those that haven’t saved will have felt the pinch more than those who have. Encourage your kids to start saving a minimum of 15% of everything they earn from their side hustle. Take them to a bank, help them to open an account with a savings pocket, and set up an automatic transfer. Teaching your kids to pay themselves a salary first is one of the most valuable lessons they’ll learn.