Our children are everything to us. We live and breathe to give them the childhood we had or wished we could have had, and do everything we can manage to ensure that they have enough of everything that can ensure that they are comfortable. While we spend money on them at every opportunity, as they grow up we tend to give them cash to enable them to make their own choices.
At what level is this reward, bribery or just teaching them good values?
One of the key things we teach our children is our values. What should their outlook be? Should they save or spend? Ideally they should learn to put some money aside for a rainy day and have some to spare for a little fun right now. In learning good money management they will have the skills to maintain a good credit rating and ultimately this will get them cheaper personal loans and mortgages when they grow up.
This is why we sometimes challenge them through incentives such as ‘double or nothing’ when they have a task to do. Coming up to their SSCEs you may give them the challenge of a higher grade in return for a bigger reward. Another example is where they might be about to participate in a sports event and the cash would be to help them push themselves that little bit harder.
The Four Rules
As can be seen above, we will sometimes add a little cash to their reward for doing something they would want to do anyway. Get good grades or be a winner at a sporting event? These are the things that shape them as people and will serve them well as they grow up. We should be teaching them the four rules of money management: spending, saving, giving and growing.
Everyone enjoys a little fun from time to time, and kids are no different. This is why you shouldn’t mind them going a bit mad down the sweet shop every so often, as long as some of the money is set aside for other things – the savings account, gifts to friends and relatives, and on worthy things such as club memberships.
Just for fun
Since the very day they were born we have been buying stuff for our children not for any educational or other reason but just because they are the most important people in the world to us. This is a perfectly good reason to give your child money: because you have some in your wallet and they are your child.
Giving money can also offset a little disappointment. As adults we might sulk off to the pub after a bad day at work, and children will feel such annoyances more acutely. A little treat when they have had a genuine setback has never hurt anyone. While remembering that they should put any excess aside for something they really want, allow them some sulk money. It is the non-genuine issues that we need to worry about!
Kids’ sole reason for being is to learn. Whether emptying your bookshelves or eating mud in the garden as toddlers, or getting street smart when old enough to hang out with their friends away from your immediate sight, their brains are always growing.
If you teach them that they will get cash for doing something they don’t want to do, such as stopping arguing with their siblings, this can form bad habits. It can teach them that having arguments and fighting can be a lucrative activity!
This is why as parents we really should offer a fixed weekly allowance and for which they must perform certain tasks. This isn’t unlike the wage or salary we get from work. Not everyone gets paid to sit about and do nothing – the chance would be nice! You can set some behaviour standards too, such as getting their homework done every night or being home before 7 on weekdays.
Kids are expensive
Like it or not, kids are very expensive. Figures from the University of Canberra The Cost of Kids report suggest that for a typical middle-class Australian family, the cost of raising two children from birth to adulthood was $812,000 in 2012. This is a 50% hike on the last time this was measured in 2002. Yet scarily, incomes have only increased by 25% in that same period.
Kids expect more these days and meeting their wants or needs can be a struggle. Sometimes a personal loan can help but we must remember not to drive ourselves into the ground to keep up with the Jones’s family activities! While teaching your children to budget, you also need to budget for yourself to manage their cost.