Kickstart your children’s future with solid financial principles

Generally speaking, not everyone who makes money is from wealth or has some special gift for handling finance. The reality is that many people from poor backgrounds have managed to build a nice nest egg and retire quite comfortably. All along the way they have managed their finances well too and provided for their families come rain or shine.

The difference in most cases comes from the kind of financial principles that they learned as children. It’s never too early for you to start talking about and assisting your children to get an understanding of what money and building wealth are all about.
It can start at an early age with simple things like talking to them about financial goals you have as a family. Get them to try to understand that you are saving for almost everything you do – the next family holiday, buying the family car and of course how you bought the family home. Talking about finance should never be taboo, but something fun to discuss and making acquiring things fun to aspire to.

Practical examples

Then start bringing in some practical examples of handling money, like teaching your children to count money and help you at the shops. This is followed by giving them pocket money and this should always be as a reward for doing something. Let them know early on that money does not just happen but needs to be earned.

Having covered that, then start teaching them that the money they earn can be expanded upon. Give incentives to increase their pocket money if they do extra chores and even more importantly if they save some of it themselves.

Budgeting

Teach them to create a little budget for that pocket money – allocating a little for their immediate expenditure and allocating something for savings. At a very early age, they can be taught that something should always go to saving for something special that you want.

If your Daughter has her eye on a particular doll or your Son fancies that Lego kit, explain that they can save for it and when they do so you will pay them some extra, teaching them probably the most important financial principle – they will be rewarded for saving!

Delayed gratification

In doing these things you are also teaching the vitally important lesson of delayed gratification. Not everything you want should necessarily happen right now. You teach your children to wait their turn at the playground, or to stand in a queue for what they want, so teach them this valuable financial lesson too – that the longer you have the money – the more you’ll be able to get in the long run. This also starts to teach them the valuable lesson of compound interest!

Using financial institutions

As children get a little older, get them to use their own savings account and teach them that they can even begin to invest in managed savings funds. This teaches them that savings can be used in many ways and if given good advice from someone who truly understands money matters, they can increase what they have without necessarily having to know all the details of how and why.
Finally, never forget to teach them that to give is to gain and this is a lifelong principle they should always carry with them. Giving a part of what they have to benefit others will not only make them feel good but this is a principle of business too. Those who help others usually are, in turn, helped. It’s an age-old principle that will always stand them in good stead.

Speak to the professionals

It’s a great idea to kickstart your children’s future with solid financial principles and we hope this advice has helped. Remember though that the thing you need do for your children is to ensure that their education is covered and you are a good example for them financially, as they learn to make their own way.

For over 25 years Hereford Group has been assisting families to grow their wealth, be protected against unexpected eventualities and retire to their place in the sun, as they so richly deserve. Contact us today and let us do it for your family too.

Stay safe and stay invested in the future!

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