Family Financial Freedom
Young Families and Money
There is a major difference between the schooling our kids get in the classroom and the fundamental principles and skills required to develop strong financial literacy. Being top of the class, receiving certificates, and being recognised as a ‘smart person’ by our peers, does not automatically convert into financial success at home. Unfortunately, it can be quite the opposite. I have encountered hundreds of individuals, couples, and families who have enormous amounts of personal debt, are living paycheck to paycheck even though they have ‘good jobs’, but have no systems or framework for teaching their kids about money, yet on their social media profile, it tells a completely different story.
This is a serious problem. Our society has a poor relationship with money. We are socialised to go to school, get an education, get a job, and proceed to trade 40+ years of our lives for money without fully taking control of this area of our life. On the contrary, money has a noose around our neck and is holding us at gunpoint until retirement at which point we look to the government to hold us afloat.
After 20 years of studying and learning about finances, dedicating much of my spare time and personal growth to become financially free in my 30s, I am devoted to investing in families to help them break the chains of this generational curse that will continue to hold families back from living through their values and living a life of purpose.
So how can we educate our kids about money and parent them in a way which results in a healthy relationship with money?
YOUR KIDS GREATEST INFLUENCE
When it comes to teaching your kids about money, just remember that the greatest influence in their early years is YOU. The mindset and behaviour you model to them in their first 10-15 years of life will have a significant long-term impact on their relationship with money. Just like how you model a healthy relationship in your marriage, you are also modeling financial habits which they will take with them into their own relationships in the future. Have you ever stopped to think about this?
Principles, discipline, and accountability are all part of the journey to mastering personal finances. When it comes to teaching our kids about money, knowing that they’re not going to become financial gurus overnight and that the best thing we can do is equip them with strong values, principles, and habits that will serve them long-term, whatever path they choose for their life.
WATCH YOUR LANGUAGE
We don’t know what we don’t know so one of the first places to begin is to consider the language we are using around our kids. Many people will say that money isn’t the most important thing, or even that it doesn’t mean anything at all, often being the very reason why they don’t have any! A hard pill to swallow I know. Some of you reading this are going to disagree, but have you considered keeping an open mind and wondering why you believe what you believe about building wealth?
“We can’t afford that”
“That’s so expensive”
“Oh they must be rich”
“They have too much money”
“Money is not important to me”
Whether we like it or not all of these comments teach our kids a particular mindset. The way we talk and walk through our lives will have a direct influence on our children.
“How can we afford that?”
“That price is higher than I expected, I wonder what is causing that?”
“They seem to be doing well financially”
“They obviously have worked very hard to get to where they’re at”
“Money is a tool, an important resource to be used for greater good”
START EARLY
Kids are never too young to learn about the value of money. Most importantly, to see money as a resource so it can serve them rather than own them.
Teaching your kids the importance of short-term goals allows them to learn the value of delayed gratification. Of course, this should be tailored to the age of your child, our 9-year-old is super diligent with his savings and spending buckets, however our 5-year-old struggles to see past next week. Asher (5) is currently saving for a hot wheels track. Whereas Jasper (our eldest) is saving for a much bigger goal. Whatever they decide they want to save for, know that there are important principles being learned along the way so that they are prepared for all the challenges life brings when they become an adult.
I would recommend starting some kind of pocket money program once your child starts school when they are in the classroom learning about maths and have a bit more structure to their day. Openly talking about this topic with the kids as soon as they start speaking words from a young age should be something they’re learning like anything else. Our 3 year old always enjoys payday with the boys and I can tell she is always learning just by watching. Remember, YOU are your kid’s greatest influence. The behaviour you model while they are young is massively important.
DEVELOP A WRITTEN PLAN AND STICK TO IT
If it’s not written down, it’s not going to happen. You’ve heard this before. A goal is only a wish unless it’s written down and there is a plan to implement it. When it comes to finances, especially budgeting, having a written plan is essential. So in the case of family finances, this is even more important. As much as you can involve the kids in this process the better. Every fortnight in our family we change up the jobs that the boys are given for the following fortnight. We discuss and agree on the allocated tasks and then print them off so they can tick them off each day as they complete them. We have found this keeps them motivated and engaged and they always enjoy tallying up their total earnings at the end of every week.
POCKET MONEY EARNED NOT ENTITLED
When it comes to pocket money I’m sure some of you have mixed feelings about whether it works or not. Maybe you’ve tried for a few weeks and then given up because it’s felt like a chore, your kids have become to just expect something for nothing, or you just don’t know where to start. Well, after reading many articles and lots of trial and error we have successfully implemented a system for our own family which is working super well currently and we are seeing our kids grasp some of the principles we are trying to teach them.
Spend, Save, Share
Payday is Sunday evening in our family. After bath and storytime and any final jobs have been completed, we sit down at the family table together and count out their earnings. Each child gets 20 cents per task each time they complete it. They only have 3 or 4 jobs to do so if they do all of them in one day they might end up earning up to 80 cents or so. If they missed a job on that day, they don’t get paid for that job. We have even implemented sick leave (at the approval of Mum or Dad) so if they were physically unable to do the job because they were unwell, we still pay them. There has to be some balance between pushing through when they don’t feel like doing it as opposed to being physically unwell.
When they get their pay, they have to give something into each jar. They get to choose how much, but every jar must be allocated something.
Barefoot Investor for Families has been a great resource for Kirsty and I to tweak the practical application of the financial principles we teach our kids. The reality is for a 5-year-old, delayed gratification is not a concept easily understood, and being prepared to accept that it’s going to take a few years to understand this, helps us be more patient with the results.
In his book ‘The Barefoot Investor for FAMILIES’, Scott Pape provides some practical recommendations for implementing some of these principles. Scott provides a simple and effective template called ‘THE BAREFOOT SCOREBOARD’ to help families manage this sometimes onerous chore, in a quick effective way.
https://www.barefootinvestor.com/
Nihil Boni Sine Labore’ – ‘Nothing Achieved Without Hard Work’
Incentivise your kids to work for what they get given. Giving kids pocket money just because they exist is teaching them that they are entitled to something just because they breathe! This family is not going to discourage each other from doing anything. If they want something they have to go out and get it. Nothing is achieved without hard work and we want to make sure our kids learn over time to take full ownership and responsibility for getting what they work for. We believe in personal responsibility, teaching our kids to grow into strong independent adults is a measure of parenting success.
Show your kids the value of giving
“ You find yourself, when you lose yourself in the service of others” – Mahatma Ghandi
It is essential to teach our kids the importance of giving. A healthy functioning society thrives when selflessness and service are at the heart of success. There are much less fortunate families, worse off, and stricken by uncontrollable circumstances who need those who are more able to help out. Personal responsibility while supporting those who can’t help themselves.
We discuss as a family on a regular basis giving to charitable organisations such as Destiny Rescue, World Vision, SPCA, or the local church so that our kids can experience the joy and fulfillment of adding value to others.
HAVE FUN
Finances for many families can be extremely daunting and cumbersome. Nothing is achieved without hard work and dedication to the long-term cause, however, it is also important that we make this as fun as possible. Try booking in some fun family activities from time to time to celebrate milestones along the way. Make it a fun family activity and talk about the benefits of an outcome worth pursuing.
Embrace the discomfort of tackling this big area outside most people’s comfort zone and get ready to enjoy the fruits of your labour as your kids grow up to be diligent, confident, and skilled stewards of their finances.
Make it Matter!
Jono & Kirsty Rowe are passionate about developing families and impacting communities to prepare and equip the next generation for success in all areas of life. Follow them on social media and subscribe to The Legacy Academy Podcast for all the latest updates on tools and resources that can assist you and your family in living the life you were created for.
