Financial literacy is a phrase bandied about a fair bit these days What it means is having the skills and knowledge to make good choices around your finances.
In New Zealand at least, household debt is out of control. And if children grow up with no financial literacy instruction largely due to adults who model spending more than they earn, the problem will only get worse. And at some stage, someone will have to pay up.
Recently, I watched a conversation evolve on Facebook between friends attempting to get a handle on what is a reasonable amount of “pocket money” and what are acceptable “chores” for their kids. The general consensus was children/young people should be expected to contribute to their household in an age appropriate way and if they want pocket money, it needs to come from extras.
In our home, we’ve had plenty of discussions around what counts as “extras” and what is just the stuff you have to do like put your own clothes away, keep your room tidy, set the table etc etc.
Master 11 recently designed a chore list. It features jobs like cleaning the car, hanging washing out and luxing. These are things we consider to be above and beyond for his age. He’s saving for a nerf gun (yes another if you know him well!) and doesn’t want to use all his savings. The plan is to use $40 from savings and $40 from extra chores. We’ll see how he goes.
In the past, for large ticket items we’ve had a massive clean out of surplus stuff and let the kids run a stall at a local gala day. They’re pretty tired by the end of it but managed to pay for an XBox a few years ago through their proceeds. Seeing them interact with customers, work out change and set up shop was awesome. They learned heaps through the experience.
So keep it simple, keep it doable but do talk to your kids about the cost of stuff. Set up a savings account, encourage them to put in little amounts often and read their monthly statement together. We also encourage them to put in birthday money if there is nothing specific they need/want around birthday time.
Closely related to financial literacy, I believe the biggest skill we can teach our children is delayed gratification. We live in an era where people don’t tend to want to wait. They don’t want a brick and tile first home, they want to build a house. They don’t want one bridesmaid, they want four. And that’s fine – if you can afford it. If you can’t, you’re just putting yourself under unnecessary pressure. It’s also important that expectations align with income.
If, from a young age, we can teach our children to plan, set goals, save and then spend, it might save heartache later on. It might also mean some heated discussions, they might not always like having to be told to wait, or even to hear “we can’t afford that” but in the long run, you’re setting them up for life. It’s called parenting and nobody said it would be easy! But then the best things in life never are.