teaching teens – Page 5

Teaching Your Kids About Investing In A Volatile Market

Posted on December 8, 2020 by Tim Connolly

https://www.gannett-cdn.com/-mm-/1055d08e1ba92387b2437878bb5b70d88f9226de/c=125-70-1070-604/local/-/media/USATODAY/test/2013/08/30/1377899531000-mint-photo.jpg?auto=webp&format=pjpg&width=1200 — Teaching Your Kids About Investing In A Volatile Market

Providing financial education to kids can seem like a daunting project during times of economic stability. Factor in the extreme market volatility we’ve seen during the COVID-19 pandemic, and even the basic tenet of “buy low, sell high” becomes complicated to explain. Financial downturns do present unique opportunities, however. Here we discuss ways to impart sound investment strategies to your children that they can use now and in the future.

Are Your Kids Ready To Learn About Investing?

The first question to ask yourself as a parent is if your child is ready to learn about investing. A key consideration is if your child has mastered the arts of saving and wise spending habits. These two skills create the bedrock of financial literacy and financial success.

Do They Have At Least A Five-Year Investment Horizon?

If you’re confident that your child is financially savvy enough to manage expenses and capture savings, then the next point to evaluate is if your child’s savings hold at least a five-year time horizon before being needed. Critically discuss with your child if the savings might be needed for significant expenses such as college tuition, a car, study abroad, rent, or anything else within the next five years. If the answer is yes, then secure savings such as cash, savings accounts, money markets, CDs or perhaps high quality bonds are the best choice rather than stocks which run the risk of potentially losing money. Conversely, if the savings won’t be needed for at least five years, investing in stocks provides an opportunity for gains over the long term. Just make sure your child understands that the investments they commit today might need to stay invested for at least five years which can be a long timeframe for a teen or young adult to fully appreciate.

Key Points To Discuss About Investing In Stocks

Educate your child about investing in the stock market. Teach them the basics of risk vs. reward, stocks and bonds, compound returns and the benefits of diversification.

Risk vs. Reward

Begin by helping your child understand one of the most important factors of investing: risk vs. reward. Risk is the possibility that an investment loses some or all of its value, while reward is the gain that an investment earns over time. The risk/reward tradeoff states that the potential return rises with an increase in risk. Generally, the higher the potential return of an investment, the higher the risk, and vice versa. However, there is no guarantee that you will receive a higher return by accepting more risk.

While stocks can generate greater returns over time, they are also inherently far riskier than bonds, CDs or cash. Stocks can be volatile, fluctuating sharply, particularly during periods of financial uncertainty such as during COVID-19. Since the onset of the coronavirus, we’ve seen stocks lose more than 10% in a single day. You and your child should be prepared for such possible losses before making any investments.

Stocks and Bonds

Stock investments represent partial ownership in companies and are purchased with the goal of participating in the future potential prosperity of the companies. The more profitable a company is, the more its equity (total value of the company’s assets minus its debts) is worth. Stockholders benefit from that increase in value because the price of their stock shares should also rise. If a company does not need all of its earnings to pay expenses or to grow the company, it might pay dividends to its shareholders.

Stocks have typically rendered higher returns than bonds, CDs or other investments over long periods of time.

With bonds, you loan money to a corporation, municipality or government. They pay you semi-annual interest at a fixed rate to borrow your money. At the end of the term, when the bond matures, they pay you back your principal (the full amount of money you loaned them). If a company goes bankrupt, the company owes their bondholders any amount that it is able to pay (if any) before the company can give any cash to their stockholders. Thus, bonds carry a lower risk and but offer a lower return as well.

Compound Investment Returns

To demonstrate the power of compound returns, study an investment return calculator with your child. The best way to accumulate large sums is to start early due to the power of compound returns. Let’s say your child was able to invest $3,000 for 15 years and achieved an average annual return of 7%. Their initial investment would grow to slightly over $8,500. The earlier your child starts investing his or her money, the greater the rewards are later.

Ways To Explain Growth And Risk

Sometimes graphics can convey a message better than words can. Look at a chart of the historical returns for the S&P 500 Index with your child. The growth over time is astounding. Another great lesson from the chart is to look at periods of rough patches, subsequently followed by periods of renewed growth. Long-term investing means sticking with your investments over good times and bad. No one enjoys watching the value of their investments go down, but charts can demonstrate how patience and long-term investing can pay off.

If you have a 529 Plan account set up for your child (and are willing to share that financial information with them) show them a copy of a recent statement. College savings are very relevant to teenagers. Show them your investment returns over the years. A breakout of the amount contributed vs. the current value of the account, as well as how long the account has been open, should be very enlightening.

Psychological Preparedness

A winning investment strategy is to buy stocks when they’re low, not when they’re high. However, investor psychology runs counter, where people want to buy stocks when they’re high (to enjoy the growth that others are partaking in), and then sell stocks when they’re low (due to fear of loss). If you’re going to invest in stocks, you need to be psychologically prepared to experience losses, and keep your long-term financial goals in mind. If a stock loses value and then you sell it, you’ve locked in that loss, and you might permanently impact your investment psyche for years or decades to follow. We certainly saw this happen with many young investors post the Great Recession of 2008. Many are now fearful of investing, perhaps hindering their long-term financial success. Make sure your child is prepared to experience losses, even if temporary, as one thing is certain about stocks: they will always move both up and down.

Diversification

Finally, we strongly encourage all investors to employ diversification when buying stocks, where you own broad exposure to many stocks, not just one or a few. Picking a great stock can be rewarding, and we certainly understand the benefit of a child watching the potential growth of a company they love. However, owning individual stocks increases your investment risk, particularly during periods of extreme volatility. The sad reality of COVID-19 is that some companies will survive and some will go bankrupt. If you buy individual stocks, you have to be willing to assume such risks, knowing that any one investment could lose all of its value.

A diversified portfolio comprised of at least 100 stocks helps to reduce your investment risk exposure to any one company. Recognizing that few teenagers are prepared to pick and monitor this many stocks, we recommend buying diversified investments such as index investments (i.e., the S&P 500) and actively managed mutual funds (where a professional investment manager is picking stocks).

Many of these investments still give you ownership in your favorite companies, such as Amazon, Disney, Facebook, Google, Nike, Starbucks, etc., but with less risk to any one company’s performance.

Financial freedom, Kids, money management, teaching teens

Money Tips For Teenagers

Posted on October 21, 2020 by Tim Connolly

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If you’re a teenager, you are in a very powerful position. Starting good money habits now will put you ahead for the rest of your life. Here are 8 money tips for teenagers.

I was not good with money when I was a teenager. I spent it on stuff like clothes and eating at the mall. If I knew as a teenager even a fraction of what I know now about money, I’d probably be retired. So let us help you avoid the mistakes we made with our money by giving you 8 money tips.

1. Understand The Power Of Time

You probably aren’t making a ton of money right now, but that doesn’t matter. What matters is time. And your money has a lot of it. Let’s look at an example:

At the end of your summer job, you have $1000. You invest it at a rate of return of 5%. You don’t contribute another cent for 50 years. At the end of those 50 years, you will have $11,467.49. If you did the same but only had 30 years for that money to grow, you would just have $4,321.99 at the end of those 30 years.

Of course, you will be investing much more over those years than just that initial $1000 so imagine how fast your money will grow if you start early. Time is rarely on our side but it’s on your side now if you start now.

2. Start A Money Saving Habit

How long have you been brushing your teeth? Hopefully, by the time you’re a teenager, for many years. And because you have been doing it for so long, it’s just a habit.

The power of habit is almost as important as the power of time when it comes to money. That is why it is very important to teach teens about money. A habit is something you do automatically; you don’t have to think about it too much.

James Clear, one of the world’s leading experts on habit formation, reveals practical strategies that will teach you exactly how to form good habits, break bad ones, and master the tiny behaviors that lead to remarkable results. If you start the habit of saving money now, that habit will always be with you. Every dollar you get, whether it’s a gift, an allowance, or pay from a job, get into the habit of saving a portion of it. Half of it would be ideal and now is the time to start because you don’t have a lot of expenses.

The older you get, the harder it can seem to save even 10% of your money, but if you started saving much more than that at an early age, it wouldn’t seem hard to you because it’s just a habit. This is our guide to budgeting simply and effectively. We walk you through exactly how to use Mint, what your budget should be, and how to monitor your spending automatically.

3. Track Your Spending

This can be hard because as a teenager you might be earning money by doing things like babysitting or mowing lawns and those kinds of jobs are usually paid in cash. And cash is the hardest thing to track.

There are all kinds of great money budgeting tools online, Mint, You Need A Budget, Quicken, and they’re all easier to use when you’re not dealing with cash. Cash also tends to burn a hole in our pockets, so it’s better to have it stashed away somewhere, so it’s less tempting.

It’s a good idea to establish a relationship with a bank when you’re young. In fifteen years when you want a loan to buy a house, a long track record with a bank can be helpful. Be sure to research the various types of accounts banks offer. Some will charge fees if you don’t keep a minimum balance. You should never pay a penny in fees to a bank for any reason.

Take your cash and open two accounts, a checking and a savings account. Remember, you’re saving half of every dollar you get so half goes into checking and half into savings.

It’s essential to separate your money. Money that should be saved tends to disappear when it’s mixed around with money that gets spent.You can get a debit card for the checking account. You can now spend money via your debit card rather than cash so you can easily track your spending.

The card will also allow you to deposit cash into your accounts at the ATM rather than having to go to a teller every time.

4. Get Educated

You probably aren’t getting much education about personal finance in school, maybe none at all. I have a whole conspiracy theory built around this. The more you know about money, the less you are tied to a job for decades making someone else money and the less consumer crap you buy. So you can see what it’s in the interest of certain groups to keep you in the dark when it comes to handling money.

Talk to your parents about money. Some families don’t like to talk about money, they think it’s rude or vulgar, or just none of your business.

But they’re wrong, and those attitudes are why so many people leave home without the first clue about how to handle money or anything related to it.

You don’t have to poke around in your parent’s bank balances to have a discussion about money. You can speak and ask questions, in general, terms.

One of the best ways to open the conversation is to ask what is the most important piece of money advice they can give you. Parents love to give advice and asking such an open-ended question can help to start a deeper conversation.

5. Make Smart Decisions About College

A smart decision about college can include the decision not to attend, or to delay attending for a few years and work full time to help pay for it.

A smart decision might be attending a local college for two years and then transferring to a more expensive, prestigious school. It means applying for every grant and scholarship you are evenly remotely qualified for. A smart decision is choosing to major in something that people actually get paid to do.

Lots of us would have enjoyed majoring in history or literature, but those aren’t really well-paying fields. Taking out tens of thousands of dollars in loans for these kinds of degrees is a poor financial decision. Crippling yourself with a debt that can almost never be discharged is going to color the rest of your life for decades to come.

You may have to delay things like buying a home and starting a family for years if you come out of college with monumental debt. Overall, college is still a good decision but the days of going to the best school that will have you on loans are over.

6. Establish A Credit History

Ideally, parents would help you start a credit history before you leave home.Handing an 18-year-old their first credit card the day they get dropped off at college and telling them to “use it responsibly” and leaving it at that is a recipe for disaster.

It’s better if the process starts while you still live at home, and your decisions can be monitored.Speak to your parents about adding you as an authorized user to one of their credit cards. They don’t even have to give you access to the card but adding you to the account will open a credit file in your name. Once you have a credit file, get into the habit of checking your credit score.

The biggest factor is payment history, and anything less than a 100% score gives you an F in this category. Always pay your bills on time!

Understand why you need a good credit score. Having one will make many aspects of your life easier and cheaper. Your credit score can affect everything from renting an apartment to getting a job.

7. Use Your Student ID

You can get so many discounts using your ID; Amazon Prime, tickets to museums, concerts, sporting events, restaurants, groceries, movies, train and bus travel, hotels, restaurants, newspaper and magazine subscriptions, clothing, electronics, shipping and lots more. Anytime you buy something, ask if there is a student discount.

8. Avoid FOMO

FOMO is fear of missing out. It’s easy to think everyone is having more fun than you are when you’re a teenager. And sometimes, people are having more fun than you. That’s true no matter how young or old you are. It’s important, though, to not give up what you want most for what you want now.

What you want now is to take the money you made at your summer job and go on Spring Break. What you want most is to graduate debt free. Or to retire at forty instead of 65. Or to be able to quit a job you hate because you have a big emergency fund to see you through to your next job. It might not seem like it when you’re eighteen, but all of that will be true in time.

It’s So Early

If you ask people older than you what their biggest financial regret is, a lot of them will tell you that they wished they had started getting serious about money much earlier than they did. Because doing it only gets harder the older you get. Start now so you don’t have that same regret a few decades down the road.

Discipline in kids, Financial freedom, Kids, money management, teaching teens

Why is it Important to Teach Kids About Money – When and How

Posted on October 21, 2020October 21, 2020 by Tim Connolly

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We often talk about wholesome education for children. Gone are the days when kids were told to focus only on their studies and it was assumed that the only way to succeed in life was to score well in school and crack some competitive exam. Times have changed now and children need all-round education and development. It is essential to equip our children with real life skills and not just bookish knowledge.

Financial education for kids is one of the basic life skills that is essential for children . Children are dependent on their parents for their needs and parents also try their best to fulfill all their needs. However, as they reach a certain age, it is important to make them understand that money cannot be taken for granted and that it takes a lot of hard work to earn money which should be utilised judiciously.

Why Teach Money Skills to Children

Life is full of challenges and one of the most important skills one needs to navigate life is finance. My daughter is in grade 2 and they have a chapter on money where they are taught about currency and buying and selling. But even till last year, she thought that to get money all you have to do is visit a bank or an ATM.

It is essential to give them practical knowledge at home, so that they can understand the importance of earning, saving and spending. This will prepare them for the challenges of adulthood.

Money lessons for preschoolers (3-5 years)

Identifying money

In this day and age of invisible money or plastic money, children often do not relate buying with actual money. My daughter, till a couple of years ago, thought credit card is how one make any purchases. It is thus important to introduce them to the rupee notes and coins, to show them how actual money works. Taking them along to an ATM is also a good idea.

Do not say Yes to demands immediately

This is the age when demands start taking shape and it is our duty as well as responsibility to let them know that “yes” is not an automatic answer to everything they ask for. It is important to not give in to unreasonable demands and let them know that

Money Lessons for Primary school kids ( 6-10 years)

During the time kids are in primary school, they can be taught many important money lessons. The right foundation put at this age will serve them throughout the life.

Piggy Bank

Get a piggy bank and introduce your child to the habit of saving little change. Kids love their piggy banks and they love putting all monetary gifts in them for later. It is a great joy when little change turns into a substantial amount over time which they can use to buy something of their choice. What better way to teach the first lesson in saving for a goal!

Avoid Impulse Buying

This too is a life lesson which can serve kids through their life. How often do we see something on display and buy it without thinking if we really need it or not.

You can help your kids think about the purchase they want to make. Help them understand that the toy or the game that they feel they just cannot do without at the moment may lose its appeal as soon as you reach home.

Save for goals

When kids are this age, we often give in to their demands because they are just so cute and we want to give them everything we can. But here comes the catch. Getting everything as soon as they ask for does not allow them to appreciate or be grateful. It is important to let them know that if they really want something, they must plan and save for it, just like adults need to plan and save for their life goals.

If you child wants a cycle or a video game, let them know the price and how much you can contribute to it. Remaining s/he must save. See the zeal with which they will save every penny they can and the joy and sense of achievement which they get upon reaching that goal.

Board games for Money lessons

Another good way to introduce kids this age to money lessons is by engaging them in board games like monopoly, business and game of life. Good way of bonding for the whole family while imparting some life lessons.

We also make up our own games like simply buying and selling toys and using actually notes and coins, lkearning to pay eact amounts and calculating change to be given etc.

Learning to make financial choices

One has to make judicious financial choices all our lives and the foundation can be laid early. When your child wants an expensive toy, you can impress upon the fact that they can either have the toy or the class which they have been wanting to take for a while, since you cannot afford to buy both and it is upto them choose which one is more beneficial to them and what can be pushed off for a little later.

Choosing cheaper products

Quite often as grown ups, we have to choose a cheaper product instead of a more expensive branded product because they pretty much serve the same purpose. Ot we hunt for the best bargain across stores for the same product. Kids can do the same. We realized buying books online was way cheaper than buying it in stores. So, now once we browse the bookstore for a book and like it, we check it on Amazon or Flipkart. And more often than not, it is 30-40% cheaper online. My daughter resisted it initially because she wanted it immediately, but not anymore. She knows she can get it the net day and we can save a bunch by buying it online.

Learning to handle peer pressure

This is something that we struggle with all our lives. We want to throw best parties, look the best, want our children to go to the best school, have everything that our friends or neighbours have. Kids too want to get the game that their best friend has. She wants the latest barbie even if she doesn’t play with 5 others that she already have. Drawing a line is necessary while explaining to them there will always be someone who has something which you do not have and that you cannot live your life trying to be like others.

Money lessons for Middle Schoolers (10-16 years)

This is the age when kids are on the verge of adulthood. They think they know more than their parents and the horizons are widening each day. So, now you must give them the freedom along with the responsibility of managing their own finances.

Budgeting

Give them a fixed pocket money and they have to use it wisely. Do not give any top-ups. It is best to not give them use of cards.

Earn your own money

If they want extra money for their needs, they can try earning some. In India, it is not very common to allow kids to work during school and college years, but it can teach them many valuable lessons.

Handle their own Bank Account

As children go into high school, you can open their own bank account, which they can operate and save their money in.

Understand the pitfalls of credit cards and loans

A lot of kids these days seem to think that all you need this a credit card and you can buy whatever you want. Teach them that credit cards are loans and you have to pay back loans along with a huge interest on top on the amount you borrowed.

Showing how little amounts add up/ compound interest

Once they have their own bank account, you can teach them how savings add up and putting in little amounts can lead up to a big amount at the end of year or so.

With these teachings growing up, kids will be much better prepared to face the financial challenges of adulthood.

Financial freedom, Kids, money management, teaching teens

5 crucial financial lessons for kids of all ages

Posted on October 21, 2020October 21, 2020 by Tim Connolly

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There may never be a better opportunity than now to teaching kids about money. Many parents are likely spending more time with their children thanks to closed summer camps and virtual schooling brought on by the coronavirus pandemic.

“We don’t always get a chance in our life to pause and be this present with each other,” said Stephanie W. Mackara, president and principal wealth advisor of Charleston Investment Advisors, based in Mt. Pleasant, South Carolina. She’s also author of the book, “Money Minded Families.”

“Just like we want to teach them about eating healthy, exercising, and not sitting in front of the TV, we also have to include financial and basic money management skills,” she added. With millions of Americans still unemployed, parents may also be struggling financially and don’t know how to address the issue with their kids.

However, talking about financial health is just as important as discussing physical and emotional health, Mackara said. She suggests approaching the discussion head on with your kids, but not going into the “gory details” of your financial problems.watch nowVIDEO02:08What kids know about money. “We don’t give kids enough credit,” she said. “If we explain to them what we are dealing with, they will jump on board.”

Here are five crucial money lessons to teach your children right now:

1. Needs vs. wants

If you are making cuts to your budget, looking at what is necessary and what is not, explain to your children what you are doing and why. Differentiating between a need and a want will help them build smart spending habits.

Even if your own financial situation hasn’t changed due to the pandemic, chances are you know someone who is struggling or cutting back on spending.

Ask your kids if they know anyone cutting back and, if so, what those families are changing, suggests Tom Henske, a certified financial planner with New York-based Lenox Advisors.

2. How to make money

With the changing job landscape for teens, normal jobs may not be available. But there are also opportunities to be entrepreneurial, said Henske, who developed and runs his firm’s smart-money kids program

You can even encourage your younger kids to think about how to make some cash.

It can be anything from raking leaves and mowing lawns to child care and tutoring, especially with so many parents trying to juggle work and their younger kids.

“Parents are afraid their kids are not going to get a good solid year in school,” Henske said. “They are looking for some supplemental work.”

3. Pay yourself first

Once they start making money, make sure your kids know to start putting some of that money aside. They will learn discipline and how to value themselves and their goals, Mackara said. “Teach your kids that saving equals freedom,” she said. “When you save money you have the freedom to do so many different things.”You can also try to be a good role model.

If you spent less money during the pandemic by not going out to dinner, traveling or paying for things like child care, put that money aside and tell your children what you did, suggests Henske.

4. Spend less than you earn

While this goes hand-in-hand with saving money, it’s important to instill in your children the importance of not overspending. Creating habits early can make it second nature for kids when they are older. “It is just a habit that you save and you spend less than you earn,” Mackara said. “If they can do that with the first dollar that they earn, they will be set.”

5. Investing

Saving money is crucial, but investing is a great way to really grow your money long-term, Mackara said. Teach your children as young as possible the benefits of compound investing, which is essentially your interest earning interest, she advised.

While Mackara is a proponent of being diversified and investing in index funds over stock picking, she also thinks looking at specific stocks with your kids can really engage them.

Talk about the shoes they wear or the games they play and relate it to the companies that make the products.watch nowVIDEO01:20Here is how parents can protect their nest eggs when their adult children move back home

Your kids can also simulate stock trading through the SIFMA Foundation’s stock market game or go through the paces on the London Stock Exchange’s fantasy game.

Even though life may seem hectic and overwhelming right now, it will pay to have these conversations with your kids, Henske said. “We [may] look back two years from now and realize that we squandered a lot of time on things that we thought were important and they weren’t, at the detriment of things that should have been more important.”

Financial freedom, Kids, money management, teaching teens

How To Teach Your Kids To Budget

Posted on October 6, 2020October 24, 2020 by Tim Connolly

Knowing how to budget is incredibly important. Creating a realistic budget and sticking with it can save us from making major financial mistakes, including living beyond our means and incurring credit card debt. I wish budgeting was taught at school, but as far as I know it isn’t, and so it’s up to us parents to teach our kids how to budget. Fortunately, life creates many opportunities for us to do so.

This is what we do with our own kids to help them learn the concept of budgeting:

Monthly Allowance

Giving a monthly allowance is probably the best way to Teach Teens About Money management. A monthly allowance will help then learn that they have a set amount of money for the month, and that they must be able to stretch that money until the next “payday.”

Store Budget

When I take my pre-teen daughters clothes shopping (one of their favorite activities these days – BIG surprise :)) I like to give them a set budget for that particular store visit. So, we might agree that I will purchase the necessities (basic new fall clothes such as tops and jeans), and they can pick a few “fun” items such as fashion tops, scarves, or excessively torn jeans – the kind that is not allowed at their school.

I love watching them carefully budget when we do this. Say they have a $50 budget that day. They go through the store, pick the items they like, try them on, and then, once they have a few items they absolutely love, they go through the difficult process of deciding which of the garments they will give up.

I love this process because I believe it reinforces that you do NOT take all the items and finance your purchase with debt. Staying within your budget means sacrificing and giving up on things. I want them to learn at a young age that they don’t have to buy everything they want or like. That it’s OK to tell yourself, “I love this item, but I can’t afford it,” and put it back on the

Paying for Non-Necessities

Of course, for the model above to work, the kids should be the ones paying for non-necessities. If we were to buy them everything they wanted, we wouldn’t have been able to create opportunities for them to learn how to budget and spend one’s money wisely. So in our family, we pay for necessities (what exactly this includes is up to each family to decide) and the kids pay for extras. Very torn jeans that are not allowed at school are a good example of what might be considered as an “extra!”

Talk About Money, Cost of Things, and Budgeting

When it comes to teaching my kids I usually prefer showing by example, but sometimes talking is important too. In our family, money is NOT something we avoid talking about. We talk about money, and we share our own dilemmas and decisions with our kids. For example, when shopping with them, even when we pay, we keep the discussion going about prices of items, what do those prices mean in the context of our budget, and why we prefer to look for items on sale or won’t buy overpriced cherries at the beginning of the season.

We also discuss larger family expenses with them. For example, we recently had a conversation about their private school tuition. We’re Jewish, and have decided to send them to a Jewish private school for 6 years (kindergarten and elementary school) to teach them basic Jewish concepts and Hebrew. For middle school, we’re planning to move them to the excellent local public school system (can’t wait).

So we talked about the total cost for six years of private school for both of them. They were shocked to realize that the cost is comparable to the price of a house in some areas (but not in the expensive Bay Area of California!), and that the tuition money could have bought us a shiny new car each year. I think it was a good discussion, because it made them realize that during those six years when Jewish education was a priority, we gave up on other things. One of the most important concepts of budgeting is to accept that you can’t have it all, and that if you choose to pay for something, you will have to give up something else, so it’s all about prioritizing.

We also talked about the kids’ 529 accounts and the total cost of college. Again, we compared that to the price of a house, of a car, of clothing – trying to help them grasp the meaning of these numbers and realize that Mom and Dad are cutting in other areas in order to finance the incredibly high cost of higher education.

The Basic Message: You CAN’T Have It All

One of the things that gets people into financial trouble is a sense of entitlement – the belief that they “deserve” certain things, maybe because “everyone else” seems to have them, and so they buy these things with credit, even if they can’t really afford them. One of my major goals with my kids is to drill into them that they should not expect to have it all. On the contrary, they should fully expect to give up certain things in order to finance other things that are more important to them.

Discipline in kids, Kids, money management, Parenting, teaching teens

Simple Ways to Teach Your Children the Value of Money

Posted on September 18, 2020September 18, 2020 by Tim Connolly

Children aren’t born knowing how to manage money. Yet, teaching kids about money is often neglected. This can lead to poor choices in adulthood as well as costly habits and mistakes. As parents, we owe it to our children to talk freely about money and teach them how to become responsible when it comes to their finances. Then, we must follow up by providing real-world opportunities for to handle money on their own.

The Grocery Store is Your Friend

For a real-life budgeting and shopping, it’s hard to beat your local supermarket. Including your kiddos in the weekly grocery shopping is an excellent way to let them practice the skills you are teaching them. Share your grocery list and budget and then let them help you track down some of the items. Give them a set amount of money and challenge them to purchase as much food as they can with it. Or consider assigning older children a weeknight to be responsible for dinner. Require them to plan, budget, and shop for their meal and then actually prepare it and feed the family, it’s a great boost to their self-confidence.

Make a Plan For Your Kid’s Allowance

It’s hard to learn to manage money if you don’t have any. Children need access to money and opportunities to practice using it. Allowance is a great way to create those opportunities. Some parents link allowance to household chores; others expect their kids to help out with chores as a contributing member of the family and keep allowance separate. Regardless of which method you prefer, what matters is using allowance as a tool to teach your child the value of money and how to handle it responsibly. Here are our favorite tips for handling allowance for different ages:

Preschoolers and Early Elementary Students

Very young children can learn a lot from playing with Monopoly money and a toy cash register. Playing store and buying and selling items around the house is great fun for little ones. Once they reach school age, a regular allowance is appropriate. A good rule of thumb is one dollar per year of age per week. So, for example, an 8-year-old would receive $8 each week as compared to the 17-year-old’s $17 per week.

Late Elementary Students and Junior Highers

You may choose to provide your children with opportunities to earn over and above their regular allowance by taking on larger house projects like cleaning out the garage or washing all the windows. Plus, as they get older, money-earning opportunities outside the home will become a reality. Kids can babysit, pet-sit, mow lawns, and hold down part time jobs at stores or restaurants.

High Schoolers and College-Aged Kids

Finally, at an appropriate age, replace weekly allowance completely with your kid’s own earnings. Let your child have his own checking account to help him build skills and practice with actual financial tools. And remember, he is going to make mistakes, but that is an invaluable part of the process. Better to make $50 mistakes now than $50,000 mistakes later.
Spending. Saving. Giving.

Don’t make the mistake of indiscriminately throwing weekly allowance at your kids with no rules about what to do with it. Help your children use their allowance to establish a budget. A common rubric is to designate three categories for their allowance: spending, saving, and giving. A breakdown of 30% for spending, 30% for short-term savings, 30% for long-term savings, and 10% for giving works well for many people. Make sure to teach them wise decision-making practices in each category:

How to Spend

Teaching your kids how to spend wisely is one of the greatest benefits of giving an allowance. Kids shouldn’t be left unchecked to spend their money however they choose. Create expectations for spending and, as they get older, give them increasing responsibility for their own purchases.

Reasonable expenditures for kids include entertainment, birthday and Christmas gifts for loved ones, a set portion of their clothing, toys, cell phone bills and other electronics. Once your kids are of driving age, you may also consider having them pay for their gas or a portion of their insurance.

Use their spending endeavors as a vehicle for teaching about needs versus wants and help them make wise choices. For example, is there a critical difference between the $35 jeans and the $85 jeans? Encourage them to consider the values behind the decisions they make.

How to Save

Saving money must become a habit or it simply won’t happen. The earlier you begin, the better you will be at it. Talk with your kids about saving for short term wants, like a new cell phone for older kids or a Lego set or doll for younger kids. Help them set aside a specific amount of allowance each week to save so they can reward themselves with the exciting purchase.

Long-term savings is critical, but often neglected. Often times, long-term savings is used for large purchases like a first car or college tuition. You might open a special savings account earmarked for these long term goals.

How to Give

Lastly, nurture your child’s compassion and generosity by encouraging them to donate to their favorite charity. Help them choose an organization or cause that is near and dear to their cares and interests and make regular contributions to it. The more they believe in the organization they are supporting, the more motivated they will be to donate. Of course, money isn’t our only valuable resource—you can also encourage your kids to give their time and work to charities they love.

Teach Them to Delay Gratification

Teaching children the concept of delayed gratification is hard because everything is at our fingertips with the tap of a screen. Unfortunately, having instant access to whatever they want can set them up with poor or impulsive spending habits. Help your children develop self-control and the ability to delay gratification by requiring them to wait a set amount of time before making a purchase. Often, with a mandatory wait time imposed, your child may change their mind about making the purchase.

You can also nurture their capacity to delay gratification by implementing a wait policy for Keeping Up With the Jones. What we mean here is, when a new toy, gadget, or clothing item becomes all the rage among your child’s peers, don’t jump to make sure he’s the first to get the newest phone or the trendiest shoes. Give it a little time to play out. Let five or six friends or classmates be the cool kids first. The character development will eclipse any disappointment they may express along the way.

Don’t be scared to talk to your kids about your own finances.

Many parents shy away from talking openly with their children about finances. The topic has a history of being taboo in American households. In short, many of us were never given the tools to talk about money with our partners, much less with our children.

Or maybe we’re worried we are not modeling responsible financial management and don’t want our kids to know. But the truth is, parents are the biggest financial influence on their children. We are teaching them about money every day whether we realize it or not. They are watching us like hawks and picking up cues from our behaviors. To avoid wrong conclusions and misconceptions, it is far better to speak openly and honestly with your children about the household finances.

Within reason, allow your children to be privy to the family income and budget. Let them know what goals you are working toward and how you are preparing for retirement. Don’t shy away from sharing with them the financial mistakes and less-than-ideal financial decisions you have made over the years. Knowing your mistakes may be the very thing that helps them void a similar pitfall in the future.

Consider giving them some input on certain appropriate family financial choices and decisions. Integrate them into the process to foster an appreciation for how the family budget works. A plus side to this practice: When kids know how the family budget works, and what’s on it, they are less likely to pester their parents for extras.

Financial freedom, Kids, money management, teaching teens

Financial education for children

Posted on September 16, 2020 by Tim Connolly

5 ways parents can teach kids about money management | Parenting News,The Indian Express

April 4 is Children’s Day , and I’m reminded of the African proverb that declares “it takes a village to raise a child”. It’s true that we all have a role to play when it comes to raising the next generation, particularly when it comes to the vital issue of financial education for kids.

Financial education is a right. Some would say a basic human right. We need to make sure that every child in Hong Kong is getting what they need.

Currently there’s a lack of financial education in our schools. It’s true the situation is slowly changing for the better, but we need to overcome some pretty high obstacles including an already jam-packed school curriculum and a tendency to focus exclusively on exam-related subjects.

We need to start helping our children now!

An international survey (PISA) of 15 year-olds showed that two-thirds of them currently use a financial product. If you consider an Octopus card a financial product, the figure in Hong Kong would be even higher.

More kids than ever are expected to take control of their financial destiny. We really need kids to have a firm grasp of basic concepts like savings and debt management before they leave school.

Some theories suggest that early childhood is the best time to embed good habits and, as a rule, schools are a great learning environment.

Have input to what happens in your child’s classroom by talking to his or her teachers about how financial education can be incorporated into other subjects. Some schools now offer money management as an extra-curricular subject. If it’s not available at your child’s school, ask why not!

Let’s not forget that we all have a role to play in bringing up our children to be financially savvy. Teach your child some basic money management concepts this Children’s Day. It could be one of the most valuable lessons you ever share.

David Kneebone
General Manager, Investor Education Centre

Financial freedom, money management, Parenting, teaching teens

Four simple ways to teach kids to save money

Posted on September 16, 2020September 16, 2020 by Tim Connolly

Every April, the ABA Education Foundation sponsors ‘Teach Children to Save Day’ to highlight the importance of Teaching Teens About Money management. Financial experts say that we set children up for success when we teach them financial literacy skills.

 A year-long study showed members of Junior Achievement Canada’s financial literacy program were three times more likely to save more, borrow less and spend less than they earned.

Financial literacy is a learned skill, but it doesn’t have to be complicated to be effective for children. Here are four simple financial literacy techniques to help your kids prepare for their financial future:

1) Show them that a budget can be simple .

Many people grow up feeling intimidated about budgeting, so they never learn. You can make budgeting straightforward for children by using the four-jar budgeting technique.

One for short-term savings goals (30 percent of income)

One for long-term savings goals (30 percent of income)
One for spending (30 percent of income)
One for donating (10 percent of income)

If you give your child allowance or chore money, be sure to provide it in small denominations, so it’s easy for them to divide between their jars.

2) Illustrate their savings goals.

Break out the art supplies with your child to create an image of their savings goal. Having a visual reminder of their savings goal will help your child stay focussed on the prize.

3) Help them learn the differences between needs and wants.

Use examples they can relate to; look around the house and discuss your family’s choices and the things that you could live without. This process will help them to make more informed spending decisions in the future.

4)  Set up a children’s savings account at a financial institution.

While the four-jar budgeting method is effective, it should work in conjunction with an actual savings account. Set a threshold for the amount in the long-term savings jar ($20, for example), and when your child reaches that threshold, make a big deal about depositing his/her savings in an account where that money will earn interest.

Discipline in kids, Kids, Parenting, teaching teens

10 Essential Financial Lessons For Teens

Posted on September 9, 2020 by Tim Connolly

When talking to teenagers about money, you’ll quickly learn that many believe they are experts on the topic. As teens, they understand you go to work to earn money and that it takes money to pay bills and buy things. Most teens also know that saving money and donating to causes, and those less fortunate is essential.

If your teen has figured all of that out, they’ are on the right track to managing their money.

Us adults know, though, there’s still a lot more for them to learn. As children mature and start making their own money and spending decisions, the stakes get higher. That’s where we have to take our job as parents seriously. While your teen may think they know it all, becoming financially literate is a process.

Just like your child takes math, history, science, and language arts classes at school, there are essential concepts your teen needs to master about money.

Here are ten essential lessons that help you in teaching teens about money . The sooner they understand this information, the greater their chances of becoming financially healthy adults.

Ten Money Lessons for Teens

1. Needs vs. Wants

Your teen may think they need the latest smartphone, video game, or even a car. And be prepared for a well thought out rationale if you question why they think it’s a need.

While your teen may have some good reasons to call something a need, make sure you are firm and give examples when discussing the difference between needs and wants.

A smartphone might be a need, but the latest smartphone is a want.
Without a new video game, they might miss playing with their friends online, but it’s still a want, not a need.
It might help everyone if your teen can drive to school or work, but in many cases, an extra car is wanted more than it’s needed.

We don’t want to send a message to our children that their wants don’t matter, though. If they budget for their needs and have an emergency fund in case something unexpected happens, they can set up savings accounts (also known as “sinking funds”) for their wants.

Practicing delayed gratification by resisting the urge to buy things on a whim will help prevent them from going into debt in the future.

2. Spend Less Than You Earn, Save The Difference

Your teen understands negative numbers from math class, so it shouldn’t be hard to transfer that to money. When you consistently spend more than you make, you will end up with a negative account balance.

We need to teach our teens that if you spend every dollar coming in, you’ll never get ahead.

When you spend less than you earn, you can pay your bills, avoid credit card debt, save for the things you want, and even invest for your future.

Your teen’s goal should be to grow the gap.

The bigger the difference between what they earn and what they spend, the faster their savings will grow.

3. Track Expenses and Start a Budget

Whether your teen has a job, gets an allowance, or has money from gifts in an account, they should track what they spend and set up a simple budget.

Most teens are surprised to see where their money goes when they start tracking all of their spending. If your teen has a smartphone, they can use a free app like Wally or EveryDollar rather than saving receipts.

Once they have a better sense of how much they spend and in what categories, your teen can create a simple budget with the same money management apps.

In the budget, your teen should consider setting aside money to save, spend, and give. This helps teens put cash in the bank while still allowing them to spend responsibly. By creating a giving fund, they can donate to important causes without worrying about running out of money.

4. Save, But Start Investing Early

When your teen starts budgeting and works to grow the gap between earning and spending, they’ll have more money to save.

Consider introducing your teen to high-interest savings accounts for funding short-term financial goals. While the interest they earn on small account balances might not be significant, teach them how .01% and 2.0% annual percent yield (APY) savings accounts compare.

For example, you’ll earn $20 in interest if you have a balance of $1,000 in a 2.0% APY savings account for a year. The same $1,000 will only earn $.10 after a year in a .01% APY savings account. Teach your teen that you always want your money making more money!

Once teens have accumulated some savings, they should consider investing too. The longer their money is invested, the more wealth they will build over time – even if they deposit tiny amounts.

Introduce your teen to simple investing terms and help them open an investment account. At this point, you want them to use the “set it and forget it” investing strategy knowing that this is money for long-term goals in the very distant future.

5. Use the Power of Compound Interest

Your teen now understands why they should use a high-interest savings account. After all, teens love money! Why should they settle for a local bank only giving a few pennies of interest when an online bank lets you earn dollars?

Now it’s time to show them the power of compound interest. When they invest money, and it starts making money, they’ll keep earning interest on top of interest. If they leave the money invested over several decades, they’ll see the “magic” or power of compounding – even if they never add more money to the initial investment.

Time is the critical factor in building wealth through compounding. The earlier your child starts investing money, the more they’ll earn in the long run.

If they don’t believe you, show them a graph from investor.gov of a $10,000 investment at 4% interest compounded monthly over 30 years by using their compound interest calculator. Without adding any more money to the investment, the $10,000 grows to almost $34,000.

Your teen can try out this calculator for themselves to see how different initial investments, interest rates, compounding frequency, and years invested affect how much your money will grow over time.

6. Understand Gross vs. Net Pay

When your teen gets a job, they’ll count the days until their first paycheck. But the excitement of getting paid can turn to disappointment real fast.

When your teen calculates what their paycheck should be, they’ll likely multiply the hours worked by their hourly rate. But kids don’t realize, or they forget there are withholdings and deductions taken from earnings.

If you want to prevent your teen from being shocked by their first paycheck, make sure they understand gross vs. net pay.

Money will be withheld for federal income tax, Social Security tax, Medicare tax, and any applicable state or local income taxes. There may also be deductions for any retirement plans your teen may be eligible for through their employer.

Your teen should know they may receive a refund after filing a tax return if too much money has been withheld from their paychecks during the year. But they should get used to planning their budget on their net pay instead of the higher gross pay they anticipated.

7. Good vs. Bad Debt

Teens need to learn about different kinds of debt. While all liabilities need to be repaid as a part of every budget, one type of debt can move you forward while the other holds you back.

“Good debt” is money you borrow that helps you reach your goals. Student loans can be considered good debt if they help your child earn a degree leading to employment.

But the amount of good debt someone takes on can also be a real problem. The average student loan debt per person in 2019 is over $30,000.

Teens should consider all of their options before taking out massive student loans to fund their education. Is community college for two years an option? What about living at home or graduating from college in three years instead of four?

You want them to avoid “bad debt” at all costs. Bad debt usually carries high-interest rates and is often used to purchase our wants instead of needs. Swiping a credit card too often can put teens in a cycle of debt that’s hard to recover from.

8. Your Credit Score Matters

As young adults age, they may be able to open up credit cards. Even with small lines of credit, your teen can make mistakes such as making late payments, keeping high balances on their account, or only making minimum payments.

This can prevent them from paying off their debt and negatively impact their credit score. A cycle of financial problems results when credit card debt grows.

Teens need to understand that building a high credit score can save them money on costs, including car insurance or cell phone contracts. When your teen is ready to leave the nest for their own apartment, having a high credit score can increase their chances of approval on rental and loan agreements and may save them money on utilities.

Teach your teen that their credit score can be damaged quickly by irresponsibility. Also, consider talking to your kids about reviewing their credit report each year to make sure no one has opened an account in their name.

Tell your teen to watch out for sites that want you to pay money to get your credit report. Everyone has access to a free copy of their credit report from each of the three credit bureau’s once a year from annualcreditreport.com

9. Big Loans Can Really Affect Your Life

Teens can be faced with adult-level decisions when it comes to taking out large sums of money for things like cars and college. Before they earn a steady paycheck, they can be thousands (or tens of thousands) of dollars in debt without understanding how long or difficult it will be to pay the money back.

A car might only cost $10K to them – or a few hundred dollars a month. But young adults forget that’s only one expense they’ll have as they become more independent.

When teens consider college loans, they’re thinking about their first “real” job and how big their paychecks will be. They may not realize they could be paying back loans for decades – even if they have good jobs.

Teens considering big loans need to use student loan calculators and look at loan amounts, terms, and interest rates to better understand the debt they want to take on.

If they’ve already tracked expenses and started using a budget, have them project all of the expenses they could have as a young adult and compare it to their net pay from a career that interests them. When you add in a student loan payment, the idea of taking out a big loan may not seem like such a smart decision.

10. You Can Be an Entrepreneur Without Taking on Much Debt

Some teens are natural entrepreneurs and have terrific ideas for starting small businesses. But they may spend time online trying to figure out how to grow their business – including spending too much money to get their business started.

You don’t want to dampen your child’s enthusiasm by only talking about money. But you also don’t want your teen (or yourself) to take on too much debt before you know that they’ll stick with the business. And that it will be profitable.

Help your teen figure out ways to market their business, get the equipment they need and find customers for as little money as possible. This will also help them make money faster because they won’t have a debt to pay off.

If their business takes off, they can put their profits back into their company to help it grow. Or they can find other low-cost options to help scale their business.

Discipline in kids, Financial freedom, Kids, money management, Parenting, teaching teens

Pocket money for a two-year old? How to teach children about money

Posted on September 9, 2020 by Tim Connolly

“A weekly allowance is great way to help kids to manage their money. There is no better way to help children learn to manage their money than to make their own mistakes.”

If your children, like so many, enjoyed a Christmas of munificence, the sight of an overflowing recycling bin and ever-too-swiftly discarded presents may have left you with a slight sense of the Grinch. But if cutting down on the amount of presents your children receive from friends, family and Santa is out of the question, how about opting for an alternative tack: taking the time to instil in teaching kids about money.

Yes, they may still end up getting too much in your eyes, but they may also have a greater appreciation for how much things actually cost. And you never know: convincing your offspring of the benefits of financial prudence might just help you keep your own finances in check this year.

It is hard to dispute the fact that childrens’ expectations today have risen sharply when it comes to Christmas and birthdays – and even in day-to-day life, when eating in a restaurant or getting a takeaway is not an unusual occurrence.

If you’re a parent, you’re probably already familiar with a child coming home from school bemoaning the girl or boy who received 20 presents from Santa or €1,000 for their communion.

“My sense is that children seem to get much more compared to previous generations; it’s probably a function of prosperity and the consumer society we live in,” says financial adviser Simon Shirley. A parent himself, Shirley’s seven-year already has his eyes on his Christmas 2017 wish list.

This environment of relative bounty means that it has never been more important to educate children about just where all those presents come from or risk having them reach adulthood unable to adjust when the parent turns off the financial tap.

For Marah Curtin, head of client engagement at Davy Stockbrokers, it’s never too young to start teaching your children about money. “The value of money, how to earn it, and save it, and maybe even share some with those less fortunate, are all good lessons to learn as early as possible in life,” she says.

Curtin runs Davy’s Cents for Kids programme, aimed at teaching young children about money. She says that even very young children do grasp the basic concepts of money and budgeting.

And the earlier you can start, the better.

“We’re not raising children, we’re raising responsible adults,” she says. “One of the biggest mistakes is to wait until they’re in their teens to start talking about money.”

Pocket money at two

Whether to give weekly pocket money, how much, at what age, and whether it should be linked with household tasks is something most parents will grapple with at some point. Not Curtin, however. When her eldest child was just two years old, she started giving him an allowance.

“A weekly allowance is great way to help kids to manage their money,” she says. “There is no better way to help children learn to manage their money than to make their own mistakes.”

She suggests that children should get €1 per year of age. So, for example, a five-year old would get €5 a week and a 10-year old €10. “As the child gets older, the money increases, but so do the responsibilities associated with receiving that money.”

And don’t be tempted to put your hand in your own pocket when the inevitable happens and the child spends their money too quickly. If they waste all their money on Pokémon cards on a Friday and have nothing left for a treat on a Saturday when their siblings are eyeing up an ice-cream, let them suffer.

“Don’t bail them out!” advises Curtin. “Too often parents don’t express that there are limits.”

Sometimes, we as parents take the easy road; when you’re busy, stressed, under pressure, isn’t it easy (if you have the means) just to buy whatever your child needs rather than make them to wait to save for it, and possibly endure the associated whingeing that comes with it?https://tpc.googlesyndication.com/safeframe/1-0-37/html/container.html

Maybe, but it’s not always the best option.

This Christmas, Curtin’s 12-year-old learned a life lesson when he found a gift under his tree that he may not have dreamed of – his school uniform. Earlier this year, he lost his school tracksuit and, rather than putting her hand in her pocket to buy him a new one, Curtin put it on his Santa list. So, while he may have gotten all the traditional trappings of a 12-year old as presents this year, he also had to sacrifice one of his gifts.

“It’s a big lesson for him,” she says.

Pleasure of saving

For many kids, the joy of getting money is in spending it. But others will take as much pleasure in saving it. The key is instilling the benefits of delayed gratification and encourage those who are loathe to save to do so.

A nine-year old getting pocket money of €9 a week, for example, won’t immediately have enough for a new Barcelona or Leinster jersey. But if they are taught how to save, and manage to do so, the benefits are twofold.

“It’s quite satisfying for a child to get something they want to buy with their own money; it’s an incredibly important goal,” says Curtin, “It’s empowering”.

Ron Leiber, a New York Times personal finance writer and author of The Opposite of Spoiled, suggests that parents give their children three money banks, rather than the traditional one, with each one labelled “give”, “save” and “spend”.

To make it even easier for kids to understand the impact their saving has, use transparent jam jars so children can see their money grow. It also introduces the concept of giving something away to charity.

So, if a child gets €9 for example, you could encourage them to put 20 per cent (€1.80) in the “save” jar, 10 per cent perhaps in the “give” jar (which can be donated to a charity of their choice at the end of the year) and the rest in the jar for spending.

When it comes to teaching children about money, many parents may be looking to recreate the days when they got their Henri Hippos and little blue savings book from the bank. But for younger children especially, understanding the link between a bank account and their money may be a step too far.

“It doesn’t always make sense to open an account,” says Curtin, pointing to the charges and minimal interest. “It can actually cost to have money in the bank.”

Instead, keep it simple by adopting the money bank solution outlined above. “I really think the power in teaching children about money is keeping it tangible,” she says.

SSIA for the home

So, instead of earning maybe €1 in interest every year, an easier and more concrete way of encouraging your children to save is by running your own family-style SSIA scheme. This could see you offer an extra €1 for every €10 saved, or you could add a €5 to every €20 saved, or some such approach.

Anther option is to encourage children to convert their money into “Cyril Squirrel” savings stamps at the post office. You can buy a stamp for just €1, and younger children will enjoy sticking them into a savings card and watching them grow.

The downside of these stamps is that, to cash them in, you have to lodge them to an existing Post Office deposit account, which you may not want or need. And savings stamps may not be as tangible a sign for a child, in the way a tower of €1 coins in a jam jar is.

For older children, a bank account can be a useful way to introduce them to the formality of finance, or even a safer place for their funds once they start raking it in after their communion.

“I remember vividly I got £29 for my communion and opened an ICS building society bank account with it,” recalls Shirley. “It’s a good way to gain an understanding of money and get into the savings habit”.

When the time comes to buy new football boots, a new swimsuit or school bag for the child, rather than go off and do it yourself, get the child involved in shopping around for the best price. Thanks to online shopping, it doesn’t necessarily mean a tortuous expedition to your local shopping centre.

“Take advantage of teachable moments,” says Curtin, who adds that the weekly shop is another good place to get children involved in looking for the best value.

For tech-savvy older kids, there are plenty of apps available that they might enjoy using and which will help them track what they’re spending their money on.

Financially sheltered

It may be tempting to keep children sheltered from the harsh realities of your family’s finances, where you may not have enough money for everything and struggle to stay afloat. After all, why burden them with this knowledge when still so young?

However, a little knowledge, delivered in a child- or teen-friendly way, can offer an important early exposure to adult life.

“In my teenage years, I understood how much my father was earning. The sooner they [children] are exposed to this, the sooner they grasp it,” says Curtin, noting that some people may feel ashamed to tell their child that they don’t have the money for something.

“We don’t want to worry children, but it is okay to say ‘we don’t have money for this because we’re saving for this right now’. The more we talk about decisions, the more our children become aware.”

Shirley suggests taking it a step further and equating something the child wants with the amount of work needed to generate it. So, for example, if a Lego set costs €100, then this could mean 11 hours work in a shop.

“Childhood should be carefree,” he says. “But a child should have some sense of what the family can afford and not afford.”