Today I wanted to talk to you about, first of all, some of the worst lessons that you can teach your children about money, and then I’m going to share with you 10 tips as to how I believe that you can start to help your children develop a positive relationship with money.
The reason that I’m sharing this today is because on several occasions in the last few weeks I have been coaching clients, and two of them in particular have been financially rescued by their parents. I actually believe that when parents financially rescue their children, it’s not necessarily the right thing to do. Now I’m a parent. I’ve got two children, and I can fully understand why parents financially rescue their children when they’re in financial difficulties, and I’m sure if I was in that situation that would entirely cross my mind. But the reason that I think that it’s not wholly the best thing to do for kids is that rescuing children from feeling the discomfort of associations with poor decisions around money can actually stunt their learning and their growth and their development.
Sometimes we have to go through these pain points, these challenges and manage the challenge ourselves in order to learn those lessons. So I really can understand why parents do it, but the number of occasions that I’ve worked with people where their parents have financially rescued them and then they haven’t really then learned how to get out of this habit, this cycle themselves. And so guess what happens. The same thing happens a year later, or two years later or three years later. And the reason for that is because when someone financially comes in to rescue us, we don’t actually deal with the underlying root, the underlying cause.
So that’s one of the worst lessons that I believe as parents, we can teach our children. I also believe that teaching them that they can have anything they want (this is a pretty obvious one) is not necessarily going to teach them the value of money, especially when it’s related to behaviour. So I know I’ve done this personally many occasions – how many times as parents do we reward children financially for behaviour? Think about it. When they become an adult, we don’t get given money when we behave well. If I cook dinner or if I brush my teeth or if I pick up my clothes after I’ve thrown them on the floor after a shower, I don’t get financially rewarded for that.
I know a lot of parents give pocket money to children, and I don’t believe that children should have pocket money when they do household chores. Because actually, as adults, we don’t get that financial benefit. So I don’t think that pocket money in relation to behaviour is necessarily a good thing to do.
10 Tips to Help Children Develop A Positive Relationship with Money
Tip 1 – Set Limits
This is really interesting from a behaviour perspective, it’s not necessarily directly related to money. But I think understanding that the art of patience over instant gratification are really great lessons for children of any age to learn. So, for example, if you’ve got younger children, then setting limits on technology, for example, will just start to teach them the lesson of patience. With social media nowadays and the likes of Amazon, that one click purchase, for example, we have to really help our children to develop that skill of patience.
When I was a child we’d have constant adverts on television. Nowadays, everything’s recorded, isn’t it? We watch things on Netflix or YouTube, or we watch prerecorded movies. Everything is on demand. So I think we have a responsibility as grown ups and as parents to teach them the art of patience. So setting limits, I think, is one really good skill that you could help to develop for your children.
Tip 2 – Acts of kindness.
This is really important because you want to be able to have a balanced relationship with money. So it’s about having some spontaneity, it’s about having some planning in place. It’s about having some fun. It’s about giving. It’s about status. It’s about carefree. It’s all of these things: we want to be able to balance out these relationships with money.
So act of kindness, I think, is really important. That doesn’t necessarily have to be active kindness with money, it could be with time. And I think actually, talking to children about the concept of time and money is also really important, because time is pretty much the only thing that we can’t buy. And it’s the most valuable thing, it’s what we all want. We all want to create more money so that we can have more time and freedom. So actually, talking to children about that, I think is really important.
Acts of kindness can be giving up their time. That could be to help a charity, it could be to support something that’s going on in their school, giving some of their time to help others. That could be the elderly, or it could be their friends. But I think teaching acts of kindness is really important. And don’t forget, children will often mirror, and they don’t always like being told what to do. They often mirror that behaviour. So if you’re giving, then often they will mirror that.
Tip 3 – Enforce consequences.
Again we can relate this to behaviour as well as money, but enforcing consequences is really important, and making the stakes small, I think, is quite a good example here. So sometimes it’s useful for children to actually feel a little bit uncomfortable with their emotions. Sometimes as adults we try and quash emotions. Children get upset or angry and we often go into the automatic mode of ‘Don’t cry. Stop crying, or Don’t get so angry’. We actually quash their emotions, which can sometimes suppress the natural feeling and emotion that we have as humans.
So I think enforcing consequences so that they do feel a little bit of pain – sounds awful, doesn’t it? Of course we don’t want them to feel pain, but they have to feel pain to feel pleasure. They have to understand disappointment.
If you’re shopping, for example, and they want this, this and this. They have to sometimes go through that recognition that I can’t have everything and that there is a little bit of disappointment there. As grown ups, if we just identify we want that, that and that, and we just buy that but we haven’t necessarily budgeted for it, that’s when we can get into debt and bad debt. So I think enforcing consequences is something else you can start to bring into the conversation and into your behaviours and your decisions.
Tip 4 – Do things together.
Little things you can do with them can make a massive difference. Even if it’s things like food shopping, for example. At any age, whether they’re little or whether they’re teenagers, food shopping is a great one. You can teach kids so much when you’re food shopping, even concepts like I talked about the fridge freezer and larder approach last week. What do you keep in your fridge? That’s your instant access bank account. What do you keep in your cupboards? That’s the kind of regular savers, fixed rate bonds, things that will get you a little bit more interest because you’re going to lock them away for a little bit longer. And your freezer is your investments. And it’s about having the balance of all three.
When you go shopping you can talk to kids about, we’re not going to just buy everything for the fridge. We’re going to put some stuff in the cupboard, we’re gonna have a well balanced diet. So you can really relate financial fitness to food in quite an interesting way, depending on their age, of course.
But also budgeting and managing money with food shopping as well. That could be really useful whether you go around with one of those zappers so they can see that you’re budgeting each each week for your food. Maybe you could have a conversation about ‘well, let’s maybe try and shave £20 off our food bill this week and we’re going to use that £20 to put towards a fun fund or a spontaneous fund’ or something like that. So doing things together is really important.
Tip 5 – Talk openly about money.
This is so important. How many of you grew up with secrets in the house around money? I’d love to know. We don’t necessarily need to go into the specifics, but I’d love to know. Drop a comment below and let me know. Did your parents hide conversations about money? Did they never talk about money? Did you maybe find out that money was being used against someone? I mean, I often saw that in my childhood – that money was used very much as a manipulative tool between my Mum and my Dad, because my Mum and my Dad were separated. We lived with my Mum. My Dad paid my Mum maintenance, but then there was always a secret conversation going on around ho was my dad going to pay it directly it to? My Mum or pay it to us? And it was always used it as a leveraging tool. So money was quite secret, actually, through certain periods during my life.
Talking openly about money is really important, even little things. Like if you’re going to make an insurance claim, for example, a private medical insurance claim or a car insurance claim, or a home insurance claim or travel insurance claim, get them involved. Just helping them to understand that you could have insurances to cover you when emergencies happen or when your health is not in a good state. That can really be useful for them, particularly for younger kids and teenagers. If they were going off to university, for example, understanding that you need to look after your things, but you can have insurances in place to cover you if things go wrong. Because then if they know that something is there, if something goes wrong, that could take away quite a lot of fear and anxiety that can often be related to money. So I think renewing insurance is just a really easy one.
Talking about the car insurance renewal is coming up, ‘Do we pay up front, or do we pay in monthly instalments?’ You can talk to them about the differences between – ‘Well, if we pay up front, we’d have to have the money already saved up’, and you could talk to about how you’ve done that.
But actually, if you haven’t got that money saved, you could have a conversation with them to say ‘Well, actually, we haven’t been very good. We haven’t saved money for this home insurance renewal, which now means I’m gonna have to do a monthly commitment, and that monthly commitment means that we’ve got less money to enjoy now’. And you can start to have a conversation with them about that.
Tip 6 – Allow them to make their own decisions.
I remember one particular time when I must have been about seven or eight, and we were at this caravan park in France. I grew up with three brothers and sisters and then my stepbrother, and my stepsister. I remember my step Dad gave all of us £5 and he said Go to the shop in the caravan park and buy whatever you want for dinner. And I believe it’s the only memory I have of being given money to make a decision about what to spend it on. I’m sure I had other others, but I just can’t recall any of them.
I remember buying a pot noodle and I absolutely loved it! And it’s really interesting how that memory has stuck in my mind. What I loved about it is that we were able to make our own decisions as to how we spent it. I remember my older brother and my twin brother clubbing their money together and coming up with this very clever idea that, well actually if we put all of our £5 together we could buy something a bit nicer. I clearly didn’t do that. I just spent it on a pot noodle for myself! But can you see how that interesting conversation and just giving them that responsibility can really help?
Sometimes if you’re going out for dinner or if they’re older, give them an allowance, give them amount of money to go out for dinner with, even if the dinner is with you, so that when they’re choosing from their menu, they can think about – ‘Well, I’ve got £30 for this meal. How am I going to allocate that £30 out?’ So it teaches them really good habits at any age. So give them responsibility, an allowance, to make their own decisions.
Tip 7 – Reward positive money behaviours.
The best example I can give of this – when I was writing this out last night I was thinking: if you’re working for a company and you’re making a pension contribution, often your employer will match part or all of your contribution. And I sat there last night thinking, what a great idea. What would happen if, for every pound that your child saves, you match it? Now, that may become a bit of a problem if your kids are saving a lot of money, but for my children at their age right now – they’re eight and six – today we went down to Metro Bank and paid in about £7 each.
My youngest actually paid more than my eldest did because my my youngest is a saver and my eldest is a natural spender. My eldest always wants to just hold more back and we gently try and nurture that. But we then matched it, and it was really interesting because my oldest was like “Thomas… How much have you got in your bank?” And he said “About £200.” And then my oldest was like, “Oh, I’ve only got 100 and something…” You could just see his brain kind of thinking that through. And there’s no judgement. There was no judgement of you should be saving more George, because he has to make his own decisions, but just really interesting that it just planted a seed in his mind. Kids are super competitive, aren’t they? So rewarding positive money behaviours, I think, is important.
Think about, could you do something like matching their savings? I’ve talked previously about talking to them about investing. If they’re buying Disney movies or they’ve got apple products or got tablets, then talking to about investing in the companies that they’re familiar with is a really, really great way to get children investing.
Tip 8 – Teach them that debt can be used.
Essentially, debt can be used. That’s what you want to teach them. You want to teach them that debt is not always bad, but debt is to be used cautiously. So If you teach them that debt is bad, then debt could become a real block. It could become an issue and actually, there are lots of situations when debt can be used – if used cautiously – that’s the little caveat with debt. Many of you would have come across Martin Lewis and his work of good debt and bad debt. University fees is good debt, potentially. To invest in your business, depending on what that is, can be good debt.
Don’t necessarily teach them that debt is bad, because actually it puts the fear of God into them. And then maybe if they do have to go into debt or they accidentally go into debt, that’s going to put so much fear and anxiety into their mind about their relationship with money. Teach them that debt is to be used cautiously rather than debt is necessarily bad.
Tip 9 – Teach them how to be responsibly spontaneous.
I sat here last night thinking about my relationship with money has always been very, very spontaneous. Literally right from the first pound that I earned. My first job was picking asparagus on anasparagus farm. No, in fact, earlier than that my first job actually, was mail shots. Anyone remember mail shots? For my dad’s business I would just put letters in envelopes and we would mail shot them out and my dad would pay us for that.
But my first job after that was picking asparagus in the depths of the winter. It was horrendous. But when I received my pay, I would just spend it immediately because I had this fear that if I didn’t spend it somebody else would. I also felt like if I had nice things that more people would like me. If I bought more clothes I’d feel skinnier because I was being bullied at school and I had eating disorder issues. I had really low body confidence issues.
So when I look back at my childhood, I think spontaneity is not necessarily indicative of a negative relationship with money. We have to think about how that serves us as well. So the fact that I’m spontaneous, not just with money but actually a lot of things in my life, means that I take risks. That also means that I’m a doer, so if someone says to me ‘Right! Go and launch this programme’, I’ll say Okay. I’ll do it and I just get it done. Whereas for other people they may be more likely to plan everything, but then they will find the actual implementation of that difficult because the spontaneity isn’t there, and because they’re overcautious.
I’m the complete opposite. I’m very happy to take risks in my life and in my business, in fact, so much so that I get really fidgety if I’ve been in a house longer than two years. I decorate the house and then I want to sell it and move on and do something different. So I really have to keep control over that.
But teaching children how to be responsibly spontaneous, responsibly planning, responsibly carefree, responsibly status driven, and responsibly giving with their relationship with money helps to create balance for them. Having a spontaneous relationship with money, for those of you that feel you’ve been an emotional spender in your life, creates a lot of fun. If somebody rings me and says, ‘Do you want to go to a concert tomorrow night?’ Yeah, sure. Instantly I’ll just be spontaneous. Where some of you reading this might be like, ‘No, I need to check my balance first.’ I need to see what I’ve got. You need to plan ahead.
There’s no right or wrong with either way, but I think teaching children how to have a little bit of spontaneous fun is really important, and then actually having a specific fund, a specific bank account or a savings account that’s labelled spontaneous fun for them is really important because otherwise they just save, save, save. And then they won’t feel like they can spend any money because they’ll feel guilty. They will feel full of shame. Some of you may resonate with some of these as well.
Tip 10 – Ignore everybody else.
Ignore everybody else. This is not about painting a perfect Instagram picture and showing the world what actually isn’t necessarily reality. This isn’t about keeping up with the Joneses, because you don’t know what the Joneses are doing to have that lifestyle. Yet comparisonitis is, I think, the biggest evil. We all do it. We all think so and so’s doing that, why am I not doing that? So and so’s got this, why do I not have that? It can be really damaging to our relationship with money and not just with money, but in life.
The number of times I’ve been at the school gates and I see a school mum and her children are being so good. Or the number of times I’ve looked at babies in push chairs and been like my kids would never sit still in a pushchair ever! Then I’m judging myself. Was there something wrong with my children? Did I do something wrong? Did I pick them up too often? You just start to create so much judgement for yourself.
So I think it’s really important to stay in your lane and to think about what’s important for you, nobody else. Because nobody else is living your life, only you are living your life. It’s only your children living your life, and you can only do your best. We’re never going to get things perfect. And there is no perfect. What is perfect? You’re never going to achieve perfect. It’s more about progress than perfection.
In Summary – 10 Tips to Help Children Develop A Positive Relationship with Money
- Tip 1 – Set limits.
- Tip 2 – Teach some acts of kindness.
- Tip 3 – Enforce and consequences get them to feel a little bit uncomfortable.
- Tip 4 – Do things together.
- Tip 5 – Talk openly about money. No secrets.
- Tip 6 – Allow them to make their own decisions. Give them some responsibility.
- Tip 7 – Reward them for positive money behaviours.
- Tip 8 – Teach them that it’s not good debt, bad debt. It’s debt to be used cautiously.
- Tip 9 – Be responsibly spontaneous.
- Tip 10 – Ignore everybody else!
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