Money is the linchpin of today’s society. It is not possible to escape this pressure. We all go to work so that we can make money to finance our lives.
If you want to have a good life, you need to know how to handle money. What are the main rules, what is good and what is not good.
But where do we learn all this? Considering the importance of money in our world, one should assume that it is the number one major in school. Far from it. School education almost completely ignores the issue of money and private finances. Everything we know about money and finances, we learn from our parents. That’s why some people get along well with their money and other people are constantly in debt and come to Peter Zwegat on TV.
Getting our children fit in terms of finances and dealing with money is a big task for us parents. What should I teach my child and how do I tackle it?
Talking about money
You don’t talk about money!
This is a widely held opinion and something that children unfortunately hear far too often. But if you don’t talk to the kids about money, how are you supposed to learn how to deal with it? Just as a child has to get on a bike to learn to ride a bike, so he has to talk about money and get used to dealing with it when he or she is supposed to have financial skills later on.
Parents who deal with the topic of money are usually reluctant to take care of themselves or are ashamed to admit to the children that the money may be scarce.
Children, however, are much more open and little taken from prestige. A child can quickly understand that a wish cannot be satisfied immediately because there is not enough money available.
We must teach our children that money is a means to an end. We need money to buy food, go on holiday and afford the beautiful things in life, like toys.
Rules for pocket money
Pocket money is the first regular income for children. The right height is a matter for parents. If you are unsure how much is enough, the dialogue with other parents from your area, e.g. from kindergarten or school, helps.
For children to learn how to handle the money, you have to follow certain rules.
No credit on pocket money – children need to learn that they can only spend every euro once. Once the pocket money has been used up, they have to wait until the next payday and cannot buy anything until then.
No advance on pocket money – another alternative to credit is the advance. Again, you should be tough. It’s about your child learning to divide the money and get by over a certain period of time.
Fixed pocket money amount, regardless of behaviour – pocket money must be a fixed size. It should not depend on whether the child behaved well or may have helped in the household. Social behaviour should not be practiced with money.
The 5 golden rules for dealing with money
Dealing with money is nifty if you get properly taught and understand it. Of course, this is not easy for children. Only if they learn it from the beginning will you implement it first and understand it later.
Pay first yourself, then the others – the first basic rule is also the most important. Explain to your child that of every euro the grandma gives or from the money that he or she gets for his birthday or Christmas, walks 1/4 into the savings box. Children understand “saving” only after a certain age. My little one has no idea about saving yet, but he loves throwing money into his piggy bank. I hope he would rather keep throwing it in there than put it into sweets.
The power of interest and interest – whoever saves, will benefit from a special experience – interest and interest. Without having to do anything, the savings grow. The longer the money is there, the faster it increases. Children must also have a certain age and understanding for this insight. If you tell your child that the man at the bank adds something to the money from the piggy bank every month, it may not yet understand that but definitely find great.
The trap of lifestyle-inflation – lifestyle inflation, a term I only got to know very late, but whose effect I have known since I worked. No matter how much money you earn, it’s never enough. As incomes rise, spending grows. At worst, spending grows even faster than revenue. Making a child understand this is very difficult. This is where you parents are particularly in demand. It is important to carry out the role model function and to design the consumer behaviour accordingly. Many purchases are not necessary but are bought Just For Fun. A good way to avoid such “impulse purchases” is the 30-day list. Everything you want to buy, you put on this list. After 30 days you look at the list and buy the things you still want after 30 days. You will be surprised how few remain. Try to do the same with your child – even if it may be much harder, as children are not known for their money.
Preventing the debt chain – Debt is not a good idea in most cases. They are expensive, inflexible and deprive you of the financial freedom. “But how do I explain this to my child?” Good question. Let’s try the same story as the interest and interest rate declaration. Except that this time it’s the other way around. If your child wants to buy a lollipop and takes on debt, the lollipop becomes more expensive. So this week your child gets a lollipop for the money instead of waiting until next week, and then for the same money to get two lollies.
Even with small purchases save – as Grandma always said , “small cattle also makes crap”. True to this motto, children should learn to compare all prices as early as possible. How much does the chocolate cost at the Edeka and how much does the same chocolate cost at the kiosk? When children deal with their own money, this “competition” can be a lot of fun for the children.
Rule number 5.5: don’t waste money
We should not only give this rule to our children along the way, but also keep to it ourselves.
We waste money when we spend it on something that we can also get cheaper or even free of charge.
For example, what do you pay for your bank account? Account management fees, cash withdrawals from third-party machines or even abroad quickly incur costs of more than 100 euros.
This is a waste of money, then you can have all this for free. You can find out how to do this on my information page on this topic.
As parents, we have an incredibly great responsibility for this important issue, as children take everything they need to deal with money from home. There is no subject that deals with it, no summer course that they can attend and where they are taught how to handle money. Perhaps at some point in the curriculum of our schools this, in my view unbelievable, maladministration will change, but until then we will probably remain in demand.
How do you deal with the topic of money education with your children or how do you have to approach this topic before.