When I was a boy, Sunday breakfasts were the most important time of the week for my family. With both my parents working relentlessly building our business, Sunday mornings were the only time we could all sit together and connect.
Being a kid, of course, reconnecting with my family was the last on my list of priorities. I could have been out playing with my friends, for example.
What’s more, these breakfasts resembled board meetings more than family gatherings. The conversation was all to do with business, investing, and money. My parents were passionate about helping my brother and me to understand the importance of these things from an early age.
Looking back now, I can see how vital those Sunday mornings were for my personal development and my understanding of how the world’s finances work. And I can see that my parents applied several specific techniques that taught my brother and me what we needed to know about handling money.
Here are the most important ones…
#1: Provide Your Kids With A Monthly Allowance
I remember receiving my first allowance at age 11. It amounted to 1,000 Slovenian tolars per month (roughly $5), and I felt like royalty. For the first time in my life, I could buy snacks by myself.
I soon learned that money doesn’t last forever and that I had to be careful not to spend all of my monthly allowance in one week.
As I grew older, my parents increased that allowance so I could start paying for necessities such as school lunch, bus tickets, and so on. This way, I got to learn how to handle my monthly finances on a larger scale.
#2: Teach Your Children How To Budget
Part of having an allowance is the necessity it creates to budget your expenses. While this can be straightforward enough for a kid going through a monthly routine, it becomes more challenging when conditions become more complicated.
My first real budgeting experiences were to do with summer vacations. Typically, I would spend these at the seaside with my grandmother. And, while accommodation and food were taken care of, I needed money for ice cream, bumper cars, and cool t-shirts.
Before giving me my summer allowance, my parents required me to explain to them how much money I needed and why. At the time, I thought they were nosey, but now I see that they were teaching me how to anticipate costs in advance.
#3: Encourage Working At An Early Age
People are creatures of habits. Therefore, it’s necessary to develop quality habits at an early age.
Kids learn important lessons playing sports and socializing with their peers. However, parents, especially wealthier ones, often overlook one crucial lesson—that kids should be encouraged to work for money starting from an early age.
I wish I’d been urged to get a first job sooner than I did. By the time I finally went to work, frankly, I was lazy and didn’t know how to communicate appropriately with adults. This meant I didn’t receive respect and my confidence levels suffered because of it.
Don’t make the same mistake. Encourage your kids to earn extra money (in addition to their regular allowance) on their own while they’re young. They’ll thank you for it in the future.
#4: Show Your Children The Value Of Saving And Investing
I’ve always been more interested in saving than in spending. However, I realize that’s not typical, especially for a child. Not everyone is born with this trait, but you can teach it.
Start by opening a savings account for your kids and explain to them that a part of everything they earn or receive as a gift will go into savings. Then regularly show them how the account is growing with the help of interest.
And remind them that the money is theirs… and that, at some point, they’ll be able to spend it as they like.
#5: Teach By Example
Finally, make sure you practice financial discipline yourself. More than what you tell them, your children will pay attention to your habits, to how you behave, and to how you spend your money. They will imitate your behavior.
I was again fortunate in this regard and can say my parents have always shown exceptional financial discipline. Thanks to their example, I never had problems managing money, even when I was young and reckless. I knew where the line was and that I shouldn’t cross it.