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Money Matters: How to Make Your Children Financially Prudent

Growing up in the Big Apple, my British mother would often say “save your pennies, save your pounds” to her family of five, of which I was the second born. She was a firm believer in the magic of small savings and how it eventually turns big. ‘Big’ is relative here. Let’s just say she meant you can save your way to a financially secure future (and present).

As a teenager I found that belief ridiculous and that attitude unbecoming of a modern, educated, and a classy woman. Yes, classy, because my mother, rather counter-intuitively for me, exuded class in every way.

For a long time I found it cheap to be counting, much less saving, one’s pennies. Seriously, what difference could saving a few pennies here and there make? I took that as an indication of an impoverished mindset, of a person unable or unwilling to enjoy life’s blessings.

I was a wannabe cool dude, and splurging on idiotic things to make a point to certain members of the opposite sex was central to my being.

More than 30 years later and after seeing the crashed fortunes of many a friend, and many more that never took off, I only have admiration for my dear mother’s philosophy toward money.

It’s not about the money, it’s about the habit.

Like all good habits in life, financial prudence also needs to be cultivated. Your children may resist you in the beginning, but will thank you for it later in life. Start them young for the conditioning to be strong. I recommend early teens, but it’s your call. Following are a few suggestions to help you along the way.

Saving is cool

Drill this into their heads as kids have the exact opposite take on the matter. You yourself will have to be less wasteful and more resourceful in general for your words to have a good impact on your children.

Splurging is fine if you can do it without it hitting your bank balance much. It’s one thing for a millionaire investment banker to pick up the tab of over $1,000 at a weekend sushi binge with friends, and quite another for someone making less than $70,000 a year to do so.

Start the saving habit early

Give them a monthly allowance, and only let them spend it after they have saved a certain percentage of it.

Give them an incentive to save

Keep any gifts or allowance raises contingent on the percentage of savings they manage to accomplish each month.

The idea here is to condition them to think that saving brings good results, just as doing your home work on time keeps you out of trouble.

Each time they point out to you how much their friend’s father spends on him, counter it wisely. Say rich people are so because they hold on to far more money than they spend, which is actually true. It is the sign of a smart person to spend within their means, stay off debt as much as they can, and save for the future that is always uncertain. A fool and his money are soon parted, as they say.

Be stylish

Parents often don’t realize just how deeply their children are impressed (for better or worse) by them. Be a smartly dressed person yourself for your kids to see that one can have a great style and enjoy life on sober budgets. When they see that in action they are more likely to take you seriously. You show them how it is done. You will gain credibility in their eyes and they will make the all-important association: smart saver = smart looker + confident and suave.

You will have to start thinking along these lines, too, if you haven’t been thus far. Meaning, you will have to start dressing smartly on decent budgets if you want to pass the habit on to your children. It is totally doable, as the most stylish people in the world, the French, will tell you. Remember, one doesn’t just raise kids, one also grows with them.

Your children might get swayed later on in life, as it is very difficult to resist the lure of the nothing that we are bombarded with all the time. But they will never forget your image of a responsible, cheerful, and well-dressed man or woman and that will always serve to bring their focus back to where it should be.

Don’t go crazy at sales

Yes, this one is for you. If you are going to do something crazy, don’t do it in front of your children. You should always have a good reason for buying things. Remember, a smart buy is a buy that you make because you need it, and when you need it. Not because others tell you so.

Counter the media propaganda

Gift your teenage children the book ‘The want makers’.  I read it in my 20s and it had a huge impact on me. It is an excellent insight into the world of advertising, and it made me see the glamour in the movies, on the television, on the big hoardings at the Times Square, as nothing except very cleverly created and executed ploys to make money off us by selling to us that which we absolutely do not need. In the bargain, they make millions, and we part ways with our hard earned cash on things that are going to start looking “so yesterday” by the next season.

The vast majority of people in this country, at least those living in the big cities, have forgotten the difference between a want and a need. Confusing the two endlessly is the fastest way to lose money. It might prove very helpful to educate your children about this.

Impart a little financial education

Educate them a little on the basics of finance. Explain the difference between an asset and a liability, and why it is important for an individual to have more assets than liabilities. If they grasp this basic concept early on, they will never forget it.

Peter Christopher

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