Children don't learn financial intelligence in a vacuum. As a parent you should be teaching by example, writes Marchelle Abrahams.Teaching children good money habits should be the top of any parent’s mind. Teaching them how to become budding entrepreneurs puts them on the right path to financial success.
Modern-day parents have often been chastised for giving in to temper tantrums and arguments and in many instances their response is: “I want my child to have the things I didn’t.”
Creative parenting expert and author Nikki Bush has a four-pronged approach on how parents should be putting strategies in place to counter this way of thinking.
“We should be teaching our children how not to fall into the debt trap,” she notes.
“Second, they need to know they cannot always have everything they want when they want them. They need to learn the value of money and to respect and look after their possessions. And, they need to learn how to save and invest because money makes money.”
Bush stresses the final point because she believes it’s a lesson that many adults have failed to learn.
She also urges parents to encourage entrepreneurial ambitions in children from a young age, but letting them independently come up with ideas and putting them into practise.
“My niece and nephew made themselves R155 on a weekend by selling candy-floss, popcorn and lemonade to passing neighbours in their estate. They got a bee in their bonnet that they wanted to create a pop up shop on the verge outside their home.
“Of course the money was split both ways, but on reflection, the workload was also split down the middle and many lessons were learnt,” says Bush.
Children don’t learn financial intelligence in a vacuum, adds Bush.
She says they need us to show them how, and making things as real as possible is the only way they can learn about money. Case in point: her niece and nephew’s pavement stall.
She does have a few tips on how to get them started:
Save for big ticket items
Children should be encouraged to save towards big ticket items. Get them to agree to save towards something, and you add the equivalent or double. They will take more care of things that they've bought.
Open a bank account
Less than 25 percent of South African children don't have bank accounts. Many parents may argue that there is no need for one, but it's quite the opposite. The idea is to teach them how to spend and save by becoming a “spaver”. Spavers know when it is important to spend and how much to save for something.
Invest, invest, invest
Teach your children to invest so that they can learn how to make money work for them. This is part of our financial education most of us missed. It's important for them to understand the magic of compound interest.
Most schools have market days as fund-raising ventures. Brainstorm ideas with them by getting them excited about it. Once they've decided on a product to sell, advertising is essential. Help them draw up posters and pin them up around the neighbourhood or school. Teach them to have confidence in their idea – if they don't believe in it, it won't sell!
* Visit Nikki Bush’s website: http://nikkibush.com/ or contact her: [email protected]kkibush.com
Famous entrepreneurs who made their millions in their youth
The founder of Facebook started raking in the cash while he was a college student and had just started the social networking site in 2004. He is worth $20 billion (R261bn).
At age nine, Johnson began making money by selling invitation cards. By the age of 11, he had saved enough money to form his company Cheers And Tears. His net worth is $3.2 million.
Brindak made her millions after launching the website Miss O And Friends when she was 10 years old. Her brand is worth $15m.
Gray started selling body lotion at the age of six. At age 13, he founded Farr-Out Food. He became a millionaire at age 14 and is the youngest person to have a Wall Street office. He is estimated to be worth $20m.
At 14 years old, Adam Hildreth and his six friends launched the famous English social networking site Dubit in 1999. He was ranked 23 in the top 100 richest young people in the UK, according to the 2011 Sunday Times Rich List.