Are parents to blame for bad money habits?

Shirley Liu 31 August 2016

kids savings accounts

Learning and earning: Financial behaviour shaped during our fledgling years.

David Koch has come out with a few top tips for instilling positive and productive financial behaviours into kids, starting with implementing budgetary meetings with your children. From when they’re little through to adolescence, Kochie encourages question time and wants to see a keen interest in money management, believing that knowledge is key when it comes to financial success.

RMIT University Economics Professor Roslyn Russell’s advice is to start very young, “A lot of money management skills are developed at that early age between three and six.”

She adds, “We may not realise it but every time you spend or talk about money when your kids are with you, they are watching and learning. Your day-to-day use of money is one of the most important ways your children will learn about managing their finances in the future.” According to Russell’s research, it’s mothers who have the most financial influence over their children, passing along lessons learned and habits hardened.

Emphasising just how much our childhood experiences, both good and bad, can influence the shaping of our money habits in adult life, Sydneysider and financial advisor Marcus Roberts looks at how the respect we have for the practice of “earning” our money shapes our attitude towards finances in the future.

I received pocket money in exchange for jobs around the house,” says Roberts. “The larger the job, the more I received in return.”

Praising the entrepreneurial initiative of some eager earners, Roberts believes that “linking allowance to work performed teaches kids how the world works and also gives money a very real value – it is exchanged for time and effort. Money had to be earned, and that working carries a financial incentive.”

When kids get money from their parents each week regardless of their performance, their parents become like a money tree – a mythical source of endless cash that requires just the slightest bit of agitation to coerce lavish cascades of convenient cash”, Roberts says.

In a world where the plastic and digital economy is making money invisible, it’s important that we encourage knowledge, understanding and consideration around financial habits.

So how can we take a wrong and make it right? If you weren’t given the FLC (Financial Learning Curve) required in your youth, there is still hope for your financial future.

A guide to kids savings accounts.

Knowledge is power

MoneySmart reported in 2014 that 54% of Australians between the ages of 15 and 74 have low-level numeracy skills. In the case of finances, the phrase “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime,” rings true.

In the wild world of budgeting, being a know-it-all can be a virtue. Having an understanding of what goes on financially in your household is the first step towards money management. With access to a virtual (and physical) world full of advice, including podcasts, webinars and online courses, you can start at any stage and work your way towards monetary mastery in no time.

Grasping at reality

Closing your eyes or covering the balance total on the ATM screen might be a sufficient distraction in the short-term, but coming to grips with the realities of adulthood and money management is key to a successful life.

In a study by Professor Roslyn Russell, Russell identified the inseparable nature of the emotional being and the financial being. The research revealed that amongst women, financial decisions were woven into day-to-day life and into emotional and interpersonal experiences.

Once we are able to take our emotional biases away from the bank balance, more rational and responsible financial decisions can be made.

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Look ahead, look way ahead

When Saturday night is within arms’ reach and retirement feels like an afterthought, it’s important to stop and consider your future self’s possible regrets.

Money Crashers suggests inserting a moment of reflection before handing over the plastic; do you need truly need this item? Ask yourself if this is indeed a want or a need.

By looking at the long-term, you can prepare yourself for a more comfortable and stable future, and your future family and friends will thank you for it.

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