October 02, 2018
Investing with Children
Why your kids won't listen to money advice …and how you can bring them around
Every parent wants the best for their children but kids often won’t listen to the wisdom of your experience, especially when it comes to money. Don't give up! Here are some of the common beliefs and misconceptions kids have about managing money—and how you could get them to take your advice.
Investing with your children, rather than for them, gives them not just money but knowledge.
1. Money buys happiness
This is one of life’s hard lessons—that money doesn’t really buy happiness. Yet what we do with our money can impact the way we feel. You can show your kids the positive effects money can have by donating to a worthy charity they can relate to.
2. The bank is an endless supply
Younger children in particular, can see banks as places with limitless amounts of money. Help your kids understand how banking works by getting them involved—help them deposit money, make withdrawals from an ATM and track their spending.
3. Parents foot the bill at home
With children tending to leave home later nowadays the lines of responsibility for household bills can become blurred. Charging your kids board as soon as they enter full-time employment can help define boundaries and, more importantly, prepare them for eventually living on their own.
4. I’ll just ask mum and dad
Spoiling your kids with gifts can be a real joy—for the children and for you—but it does little to instil good savings habits. Encouraging children to save now for things they want down the track—it’s a lesson they can draw on for their rest of their lives as their desires for toys, games and trips to the movies morph into grander aspirations for holidays, cars and homes of their own.
5. Only grown-ups have to work
Pocket money or an allowance is a common method of giving kids autonomy over their spending. Consider helping them learn the value of earning money by allotting payment for household chores or encouraging them to take a part-time job in their teenage years.
6. Money comes easily
Board games and computer games can be useful tools for educating children about saving and spending. In real life though, money doesn’t come as easily as passing Go and collecting $200 or finding a pot of gold at the end of a rainbow. Be mindful about balancing your kids’ perceptions with realistic expectations of where money comes from.
7. The future's unimportant
Just as you probably did at their age, most kids think they will be young forever. If only this were true! Retirement age will come and it's never too early to begin planning for it. Help guide your kids to plan for their long-term financial futures early on so the need stays on their radar.
8. Technology makes spending easy
Technology has irrevocably changed the way we use money and view security, making it difficult to relate to the experience of kids today. Reinforce the basic premise of the need to manage money and maintain security, which remains the same today as it’s always been.
9. Money is intangible
Children today can find it harder to appreciate money because—physically speaking—it's something they see less and less. Consider taking a practical approach to money handling such as having them count how much they hand over when making purchases and watch it amass when they're saving.
10. Do as I say, not as I do
Kids tend to learn by example; if your own money habits contradict what you're trying to instil in them, chances are your efforts will be in vain. Take the opportunity to overhaul the way you manage your own finances—for your own financial health and your children’s.
Important note: While every care has been taken in the preparation of this article, AH Financial Services makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs.