By Parcsen Loke
This is the first of a series of articles on Kids and Money.
Parents, in general, spend at least 18 years preparing their children for a life of independence and productivity. But only a few hours are spent teaching them the value and use of money. Most parents are faithful and diligent to fulfill their responsibility in providing for their children – feeding, clothing, and educating them – and many work hard so that they can give to their children more and better things. But if children are not taught from an early age to be wise with that which is not theirs how can they be wise with what is theirs when they grow up.
Just how early should parents start to teach their kids about money? With respect to this, Warren Buffet, one of the most famous billionaires in the world, observed that, “sometimes parents wait until their kids are in their teens before they start talking about managing money when they could be starting when their kids are in preschool.”
So when is a good time to start? He says, “Teaching kids sound financial habits at an early age gives all kids the opportunity to be successful when they are an adult.”
To be effective in teaching your child about money, you need to employ these three methods: Communication, Example, and Application.
Communication. Parents must verbally communicate sound financial principles to their children on a regular basis using everyday situations as case studies and illustrations. Make a list of these principles so that equal emphasis will be placed on each one of them.
Example. In addition to teaching the principles to the children, parents must be an example showing how these principles are applied in daily life. This is the more crucial part of the training process because, as they say, “more things are caught than taught”. The adage “Don’t do what I do, do what I say,” doesn’t work. Your children will ultimately do what you do more than what you say.
Application. After they have heard the principles from you and seen the example lived out in you, it is essential that you allow them to practice it. Practice makes perfect. So, without practice the children will not have the opportunity to taste the reality of the principles and be convinced of its benefits. Practice is also important because what we want to achieve at the end of the day is financial discipline in the child.
Parcsen Loke is the Deputy Director of Family Life First. He has been serving people and communities for more than 20 years, both locally and abroad. His is married to his wife Kelly and has three children ages 23, 21 and 10.