Stop your kids having money issues

Children’s money problems start young and often never go away. Pity the poor retiree who is still trying to prop up a 50-something child financially. It happens all too often.

As soon as my son discovered the concept of money – aged about three – the problems started. At first he didn’t have enough of those shiny coins that bought rubbish from the $2 Shop. Then Mr “I WANT, I WANT, I WANT” graduated to the school of the folding stuff.

These days the nine-year-old fashion conscious shopaholic has a monthly clothing budget to stop him pestering Mum. The outcome has been some quite sensible decisions about clothing purchases, the ability to delay gratification, and a new opinion on cheap shops such as Kmart and Hallensteins.

Here are tips to consider about the see-money-and-spend-it generation(s):

1. Let them fail. Telling a child that spending all their pocket money in one go might make them go without later in the week doesn’t work. Letting them do it and suffer the consequences does. You wouldn’t want your children ending up in a Chinese jail. But having a car repossessed and still being left with a debt to be paid off might just be a financial wakeup call.
2. Tie loans and gifts of money to responsible behaviour. If the children want your money, they need to show that they are acting responsibly with it. It’s not unreasonable to ask to see their bank accounts. But beware of moralising too much. A smartphone might seem like a luxury to a parent, but really is becoming necessary in life. There are, you might point out, perfectly good smartphones from less prestigious manufacturers such as Huawei. On the other hand, designer clothing is never a necessity.
3. Loving and buying aren’t the same things. People who think that loving their children requires them to buy up large are actually setting children up for a fail in money management 101.
4. Don’t buy excuses. If parents buy children’s excuses the problem will never go away. I remember one parent telling me that she paid for a first-class airfare back from London for lawyer daughter because the young woman said she needed to arrive rested enough to go straight to work. The girl took the airfare, flew back, and spent two days swanning around resting. The ungrateful 20-something deserved cattle class if you ask me.
5. Don’t make excuses for them. “Jacob hasn’t got a house because it’s so hard these days.” “Genevieve can’t save because she’s always suffering disasters.” People of all ages manage to save and get ahead. Making excuses for your kids is giving them the green light to fail.
6. Children aren’t entitled to an inheritance. They may get one out of good fortune. But it’s always a good idea to set the ground rules and make the children understand that the money is the parents’ and not the children’s by right.
7. Don’t tolerate a breach of trust. If small or not so small children breach their parents’ trust financially, make the consequences real. Sometimes that might mean calling in the police.
8. Not everyone thinks and behaves the same. Two children in the same family can have very different money personalities. Each had a different experience of growing up in the same family. They need to be handled differently.
9. Never fall for emotional blackmail. Haven’t’ we all heard it. “All my friends have got MGPs (the latest craze) and you won’t give me one,” or “If you loved me you’d buy me this.” Recognise that this is blackmail and detach yourself from it.
10. Beware of elder abuse. Adult children putting parents under pressure to provide money or be a guarantor is elder abuse. It’s a real problem in our society. Contact the police or Age Concern if it’s happening to you.

Sooner or later all children will fall into one of these traps. It’s the parent’s job to find a path that overcomes the issue and helps children grow. It’s all part of their financial education.

Links

Teaching your kids good financial habits

Why everyone should write a Will

What children cost

Eight financial deadly sins for parents

Extreme money saving