The challenge that will tell you if your kids need more money education
Nicole Pedersen-McKinnon teaches us how tell if your kids will be able to self-sustain... or if they'll be a drain.
My mini man came up with a "fun" game for our family to play the other day. Its rules were simple: the four of us would stand behind a plate of our favourite food (lasagna, lasagna, lasagna and for his little sister, chocolate brownie) to see who could resist eating it the longest.
For real. And he's six.
As much as I'd like to take credit for this, the kid is innately excellent at delaying gratification.
Meanwhile, we didn't need to play this torturous-sounding game to know that within a minute Miss Three would have felt sick on the floor, then still wanted more!
The thing is it's incredibly easy to glean a young child's hard-wired money mode from their behaviour with food. Suggest they save a bit for tomorrow and you'll probably know instantly how easy/difficult they'll find saving money as an adult.
And it's that, as a parent, you have a vested interest in ensuring, because you want them to eventually move out, right?!
In our house, we talk a lot about Future "Fred/Fatima" (insert your own child's name). Would he/she be happy tomorrow if you ate all the brownies today? There's no replacement brownie.
Key of course, for people of any age, is to make savings goals so sweet you can almost taste them. Something so tantalising it makes giving up something tasty/shiny/fluffy in the present totally worth it.
And that's where a vision board on the fridge (or kid-tastic goal targeting app) with a picture of the longed-for Lego set and a child's diligent progress towards it can work well. They can see and almost touch it.
What about older children? For five years now I've been going into high schools around the country and "skilling up" about-to-be-graduates in the ways of the real money world.
Their goals are (almost always) the same: buy a car, pay for schoolies, maybe fund some travel.
And I must say the savings focus is usually fierce as they see their friends and older students enjoying these freedoms, which is more motivating than any app or vision board!
But those who demonstrate the highest rates of success reaching their precious targets are those who really get that, like food, money is finite and you need to choose carefully how you consume it.
If you want it later, you must make it stretch.
In preparation for this age and first jobs, pocket money is a great teaching tool (by the way, this should be earned and not bestowed, especially as adults don't get money for nothing).
Try my Pocket Money Challenge for a life-changing lesson in delaying gratification.
Give your child the option of an upfront monthly amount, say $40, or 4 weekly instalments of $10.
All but an unusual few (hello my Master Six!) will choose the lump sum and then blow it all before the month is out.
Don't give them more though as that's the vital lesson and what it takes to be a fully financially functioning adult. If you instead cave, you might even be encouraging future debt dependency.
From the time they're babies, our children watch us rarely have cash but flash the plastic to buy anything we want. It looks like a modern-day fairytale and they don't see the evil bill come in (probably online) at the end of the month!
It's vital to be aware that today's kids need more money education than we did. And there's not yet enough in schools, although financial literacy has been embedded in the curriculum for several years now, thanks to the efforts of Paul Clitheroe and the Australian Government Financial Literacy Board. I'm also addressing as many near-graduates as I can get to.
So be sure that, as a parent, you constantly school, school, school, saying things like "I'm spending money that's already in my account", "I'll pay this off before I'd have to pay interest" and "I've targeted and saved for this first".
Even if it's not entirely true.
Nicole Pedersen-McKinnon is a long-time money columnist, television finance commentator, financial literacy educator, moneysmart.gov.au presenter and women's campaigner. Formerly an editor with The Australian Financial Review and the UK's Financial Times Business, she promotes ASIC's MoneySmart Teaching Program and tools all over the country via her Smart Money Start multimedia financial literacy presentations to high school students.
Image credits: Getty Images, Supplied