Teaching kids about moneyAs parents, we want to nail it when it comes to teaching our kids the important lessons in life.

We want them to be well behaved and polite so we teach them their manners. We want them to become decent individuals so we teach them values like honesty and respect. We want them to grow up to lead a healthy lifestyle so we teach them healthy eating habits. We want them to get the best jobs so we provide them with the best education we can.

But we also want them to be smart with money. We can all agree on the fact that a lack of financial responsibility in our kids can wreak havoc on their future; regardless of whether they eat their greens, look after their health, are well mannered and excel academically.

But what are we teaching them about financial responsibility? Are we investing enough time toward developing our kids into financially responsible adults?

When we discuss our efforts as parents in this department, the debate rages mostly over the appropriateness of pocket money. Whether it assists or detracts from the lesson of teaching kids to be good with money.

On the one hand, it is argued that by giving them a small amount of money on a regular basis, with some guidance on spending vs saving that money, we hope they will develop some skills and experience in managing money.?? By associating the exchange of this money for the completion of simple tasks, we are also hoping to develop a good work ethic in our child.

On the other hand it is argued that, children need to learn the intrinsic value of work. That work is of value in and of itself and not always connected to a financial reward. In other words, it?s important for them to make their bed, fold their laundry and help with tidying around the house as their contribution to the overall functioning of the household.

But are we getting bogged down in the detail and missing the real issue altogether? Whatever camp you belong too – pocket money alone won?t teach them everything they need to know about becoming a fiscally responsible adult.

Fiscal responsibility and teaching kids about money

Fiscal responsibility isn?t just about teaching kids about money. If we take a step back and look at the big picture, it all starts with lessons in personal responsibility.

Our spending habits are an expression of our personal values. Respect for how it is earned, personal discipline with how it saved, restraint with how it is spent – to name just a few. Our priorities and our decisions, including our financial ones, are linked to our personal values. Put simply, our actions are guided by our values whether we are choosing a life partner or deciding on whether to have a muffin with our coffee.

So while pocket money (and financial education at large) is an important part of the solution, it shouldn?t be the only thing that lets us tick the box on raising financially responsible kids. Knowledge is certainly power, but if our kids don?t have the values necessary to lead them to make financially responsible decisions when it comes to their finances; what good is it to them?

So if we?re not talking about just pocket money any more ? how do we instil in them the values that couple with good money management?

We live by the old adage that more is caught than taught. As parents, we should be financial role models for our children. Ensure that our own financial and personal values are aligned. This can be a difficult self-assessment to undertake but it is important if we are to set the right example for our children.

It means that we are able to reinforce their learning with examples of our own financial behaviour. Being able to demonstrate the results of a financially responsible lifestyle can help them to visualize the rewards of well aligned personal and financial values and incite a desire to do so themselves.

As parents, we should be inclusive (where appropriate) in our decision making regarding our financial affairs. Giving our kids the opportunity to learn through experience rather than lecture which makes the lesson tangible and therefore more memorable. Discussions around household budgeting, how different financial instruments are used and their purpose in managing family & personal finances (like loans, credit cards and bank accounts), investment decisions and even the difference in the cost of items during your grocery shop.

Kids need to learn the art of patience ? or delayed gratification. Having money does not have to equal consumption, and that sometimes it is necessary to save for what you want or more importantly the difference between needs and wants.

Understanding consequences of financial behaviour

Understanding the consequences of financial behaviour is imperative too. This can be as simple as the opportunity cost of purchasing one thing over another or the impact on their circumstances (good or bad) of a particular decision. This teaches kids to approach these decisions with analysis and pragmatism and to reflect on their own values and priorities in financial decision making.

Just as we would nurture the development of a healthy diet in adulthood in our kids by including healthy foods in their diet frequently from an early age, we can nurture the development of healthy financial habits by including frequent discussion on financial matters from an early age. It?s a matter of connecting life lessons with financial lessons.

As parents, our toolbox for teaching the principles of financial responsibility to our children will vary. Some of us may choose to use pocket money to teach our kids about money?or we may choose another method altogether.

But what we need to understand is that financial responsibility is behavioral and shouldn?t be viewed as one lesson to be taught at school or by giving pocket money or by any ?one? particular lesson at any ?one? point in time.

Teaching kids about money,?just like personal responsibility is a consequence of maturity, which needs to be developed and nurtured in kids over time.