This Month's Parent Tip

Teach Kids to Cash in.......

By David & Libby Koch

Parents can play a crucial role in guiding their children on the road to fortune.

All parents are responsible for helping their kids learn the ways of the world. But while most of us are pretty good on imparting our wisdom on things such as how to ride a bike, table manners and reading and writing, we often struggle when it comes to the important subject of money.

Making sure your kids get a great financial education can go a long way to helping them become successful adults. And you never know, it could make them rich. Here are four ways to ensure your kids grow up with great money habits.

PROVIDE POCKET MONEY

While it might seem counterintuitive, pocket money is actually a great way to teach financial skills. But always make sure there are strings attached.

Concepts such as budgeting, planning and goal setting can all be introduced using their weekly allowance (make it monthly pocket money for teenagers so they budget for a longer period). And if you connect the money to chores, they'll quickly work out the link between hard work and financial rewards. Try not to muddy the message by showering with gifts or additional payments with no rhyme or reason, or get into a situation where they expect to be pad for any work they do around the house.

There are "family jobs'' that are done free as being part of the family and there are pocket money jobs that are extras that help you.

ENCOURAGE ENTREPRENEURS.

Encouraging your kids entrepreneurial tendencies is a great way for them to develop early business instincts.

Helping them start a business such as a babysitting or lawn mowing service will give them a huge advantage because they’ll start to appreciate how economics, customer service and business works.

We have a young neighbour who puts out and brings in bins for 10 houses in the street. He charges $5 a week, has been doing it since Year 5 and is just about to finish high school.

INVEST EARLY

It's never too early to start teaching your children about investing. With time on their side, kids are in a great position to benefit from the magic of compounding returns. Start with explaining how shares work with practical examples.

For instance, if they're drinking a soft drink or are with you in the bank or supermarket, explain that it's possible to buy shares in the business that runs the company.

As they get older, why not suggest they participate in ASX fantasy share market game? They can even compete against you to fuel a bit of good old family rivalry.

TEACH THE VALUE OF HARD WORK

A part-time job is an essential part of growing up.

It teaches kids about responsibility, honouring commitments and the value of money. All our kids started working at McDonalds as soon as they were old enough and we reckon that was crucial in developing the work ethic they have today.

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