Children and money: What to tell them about your financial situation.
Raising children is tough.
Raising children in a world gone seemingly mad is even harder.
The sad spate of child killings recently has seen parents speak to their children more frequently and more openly about the do’s and don’ts around their safety and security - and that is a good thing.
But we should learn to communicate as freely with our children about money and how it affects them in the home and in their lives.
They don’t need to know every detail of your earnings, but they do need to know the overall financial situation so that they know what the boundaries are.
Sadly, these days family and social boundaries are disappearing and that leads to non-existent financial ones.
You will find children making demands on parents for the latest brand names in clothing, shoes, cellphones and entertainment allowances.
Parents succumb to these demands by opening more and more store accounts and maxing out credit cards.
The payments on all of this debt can lead to a bad financial situation, which very often will affect the relationship of the parents and ultimately the children.
Here are a few tips on dealing with your money and your children:
- Don’t be reluctant to discuss financial issues with your kids: Children are very much aware of what is happening around them. Rather have open, frank discussions about household finances with them, than have them create scenarios in their head.
- Don’t sugarcoat things: They don’t need to know exactly how much you earn, but they should be made aware of how much money is spent on necessities like the roof over their heads, school fees, food, electricity and transport. Let them know how much debt needs to be paid. If the household is struggling, tell them about it, so that they too can change their lifestyle and mindset and try and help the situation.
- Don’t underestimate your children’s intelligence: Kids are smarter than you think and learn from what they see. If they can interact via a cellphone, then they can transact via money. Take them with you when going to banks, ATMs and when you pay with your cards.
- Teach them the difference between wants and needs: Children sometimes have a huge sense of entitlement and are oblivious to what is a necessity that they need and a luxury that they want. It is our job as parents to educate them on this. Hulle kannie net alles wil hê wat hulle oë sien nie!
- Teach them that cash is king: Not all debt is bad, but debt can spiral out of control quickly. If you are already in debt, discuss with them the cost-cutting measures you are going to take as a family get rid of that debt. Encourage them to avoid becoming indebted by saving and paying cash for goods as far as they can.
- Don’t let children traumatise and torment you with excessive demands: You are the parent. Don’t put yourself into debt to appease a child who makes demands for name brands and unnecessary things. You will end up suffering and having to literally pay for the consequences.
Charnel Ernstzen, Managing Director of National Debt Advisors weighs in: “Living in an over-indebted household not only causes financial distress, it also causes emotional distress.
“At NDA, we see too many families torn apart because they haven’t learnt to speak about money, and end up looking for solutions when it is too late.”
In my personal opinion, the South African government should be spending more on financial literacy and doing more to see that our people and our youth are educated.
We find youngsters leaving matric, getting jobs that pay R5000 a month - and then immediately having debt repayments of R4000 a month. It’s crazy!
As parents, we have to change our mindset and culture around saving, debt and money on the whole, and we have to encourage our children to do the same.