Danelle van Heerde. Supplied
Danelle van Heerde. Supplied
Picture: Pexels
Picture: Pexels
Research shows that parents’ attitudes to finances play a big role in determining how a child will grow up to manage money, so it’s wise to get savvy about the subliminal signals you might be sending.

Here are five must-dos for involving your kids in money matters:

1. Start by getting them to understand the concept of setting goals and saving towards them through their own management of money. It’s important to have an open discussion with your children about your household budget and expenses, and for them to know that you can't afford everything. Also, whether you decide to give your children a monthly allowance or you’d prefer to enable them to earn money ad hoc by doing chores around the house, let them learn the basics of budgeting, which can include practical trade-offs. For example, when it’s their birthday, they can choose between having a bigger party or a bigger present.

2. Set family goals and include your kids in aspects of the planning. If a holiday is on the cards, agree as a family to cut back on expenses where possible to save for the trip.

3. Help your kids to differentiate between a want and a need. Parents can assist their children to avoid falling into the debt trap in later life by having a clear view of essential costs versus non-essential costs.

4. Financial literacy is a key life skill that can help your kids to avoid making poor decisions regarding their money. Teach your children to manage their pocket money and understand that it's a limited resource, not a boundless source. Work with them to set up their monthly budget to help them separate needs (toiletries, data and airtime) from wants (entertainment). At the end of each month, track what they are spending to help reinforce a useful awareness of spending habits.

5. Help your child to open a bank account, allowing them to learn the power of compound interest and long-term savings. This is also a good way of teaching them about safe online behaviours.

Here are four money mistakes you should avoid:

1. You need to walk the talk. It's no good preaching about the importance of being prudent with money and saving for a rainy day while behaving to the contrary. Help your kids to develop healthy money habits by watching you.

2. As a parent, you presumably want your financial circumstances regarding your assets and your household income, as examples, to remain private. Use your discretion about how much of your financial affairs you divulge to your kids. Unless you don't mind this information being shared on the school playground, that is.

3. Don't give in to your child's requests to buy them things every time they ask. Today's digitally engaged kids are bombarded with marketing messages from brands and are often far more materialistic than kids from earlier generations. Encourage them to save for items they'd like or to wait for events like birthdays.

4. Parents with wildly different attitudes to money can be both damaging to the family relationship and confusing for kids who are picking up cues from both parties. A unified, responsible approach to money will be far more beneficial to your kids in the long run.

Danelle van Heerde is the head of advice tools and processes at Sanlam.

PERSONAL FINANCE