Guest column by Craig Torr, a director of Crue Invest

Considering the importance of money, it’s surprising that children receive little formal education about this critical commodity. We give our kids extra lessons to ensure they perform well academically, additional coaching to keep them in the team and technology to access the world. Parents are the number-one influence on their children’s financial behaviour, so it’s up to us to raise a generation of mindful consumers, investors, savers and givers.

“According to a research report from the University of Cambridge, kids’ money habits are formed by age seven,” Craig Torr, a director of Cape Town-based financial planning company Crue Invest, says.

A father of three boys, Torr outlines some of the tools he has used to get his kids on the money-savvy highway.

“From a young age, money, saving and investments have been part of our family conversations; nothing complicated to start, but covering the basics,” Torr says.

Here are Torr’s 10 tips for teaching your children smart financial habits:

1. Pocket money: from as early as possible, give your children age-appropriate pocket money so they can develop a sense of responsibility and custodianship.

2. Giving: encourage your kids to give. It helps them to understand their privilege, and develops a sense of duty towards those less fortunate.

3. Online saving: open an online savings account for your children and spend time with them once a month tracking the effects of compound interest. As your children grow, you could consider online trading or virtual online trading games

4. Delayed gratification: practise delayed gratification in real-life situations, teaching consideration and self-control when making financial decisions. Even if your children intend to spend their own pocket money, there is value in allowing them to “window-shop” for a few days before making a final purchasing decision.

5. Family finances: involving children in family budgeting decisions is an excellent way of getting them to understand the value of money. High-cost purchases such as holidays, new cars and appliances should be discussed with your children so that they learn to appreciate how much these things cost and how hard you must work to afford them.

6. Borrowing: it is important to allow your children to borrow money from you so that they know what it feels like to be in debt. Ideally, charge them a nominal interest rate on their loan so that they can experience the dread of watching their debt grow over time.

7. Budgeting: give your children a budget and a shopping list, and let them do the grocery shop themselves.

8. Earning: allow your children to experience the wonder of being able to earn extra money. Household chores and entrepreneurial ventures are also a good exercise in self-empowerment.

9. Tough love: as your children get older and become more responsible for their own money, resist the temptation to bail them out when they make financial mistakes. Practice tough love to teach them how to manage money responsibly.

10. Read: encourage your children to read articles and books about personal finance.