Education for children is a must

Education for children is a must

It's unfortunate, but many retirees end up poor. Many people who have worked for 40 years or so and earned hundreds of thousands of pounds have very little to show for their efforts.

Where did it go wrong? In that case, you probably missed most of it. Why?  Math is only one example of a subject that schools are great at teaching us, but what they don't teach is personal finance and how to make money work for you instead of the other way around.

So, where can we send our children to learn about budgeting and saving? Our responsibility as parents is to educate our children. The problem is that many people are not very good at managing money, sometimes because we were never taught these skills as children. Let's be honest: in most homes, money isn't a topic of conversation between parents and their children. No, I don't think we should start handing out mortgage and bank statements to kids, especially older ones, because some parents, especially those of preteens and teenagers, could regard that as an embarrassing admission.

The best we can do is prepare our kids for the challenges and risks of the real world. Take inspiration from your own interactions with financial institutions and the banking system. Things will happen in our lives that will have an impact on our finances at different points. There may be things that happen that aren't in our hands, but there will also be times when we make a decision because it "seemed like a good idea at the time." Every single one of us has been there and done that, only to regret it later.

When and how should we begin them? As early as feasible; by the time most kids are 3, they have a basic grasp of currency and the idea of making a transaction with money. If you give them enough change, they can buy whatever lollipop they want from the candy store.

Here are some suggestions for getting your kids off to a good financial start:

Get your younger kids a piggy bank. Let them pick whatever shade, form, or measurement they like. Ask them to start saving their money in a piggy bank. Once in a while, they could check their bank balance and treat themselves.

Take them to open a bank account once they've shown they can handle their money responsibly. Kids can open savings accounts at most of the main high-street banks and building societies. Depending on their age, they may be given discounts or freebies like CDs, DVDs, video games, etc.

"Money grows on trees" is a common misconception among young people. Show them that YOUR effort is what generates the physical currency they use. Do not teach your kid to be lazy, even if you have a lot of money via inheritance or a job. There are probably a lot of chores, like doing the dishes and cleaning the rooms. Provide your children with an allowance, but make them earn it. They need the option to work for free sometimes to appreciate the worth of a dollar earned through their own effort.

Many adults, especially those above the age of 10, now get monetary gifts for birthdays and holidays from extended family members. Their preferences are ever-evolving at this stage of life (what a 12-year-old and a 60-year-old consider to be "the in thing" typically differs greatly!) Insist that they put away ten percent of all cash presents. You should also encourage them to save 10% of their earnings if they are older and have a paper route or similar source of income. Although this is a relatively small amount, developing this practice is highly recommended. Imagine, as a middle-aged parent reading this, how much money you would have if you had always saved 10% of your income. Very frightful!

Managing finances does not include putting all of one's cash in a safe and never touching it again. To be frugal is to exercise restraint in one's expenditures and develop a practice of conserving money regularly. Instill in your children the value of giving to others in need. This might be given to a charity of their choosing, the local hospice, or the homeless. This would help children develop a more well-rounded perspective, teach them to be considerate of others no matter the circumstances, and teach them to be grateful for what they have. They would realize that there are many ways in which financial investments pay off.

Suggest that your kid buy a diary or journal where they can write down their hopes and wishes. Because of this, they are able to set lofty goals for themselves and anticipate a prosperous future. There is no shame in wanting material things and working to acquire them. Money itself is not bad.

People frequently use the expressions "filthy lucre" and "money is the root of all evil" to describe greed and excess wealth, respectively. Just ignore them. The world would be a far worse place without money. Developing affluence aids in the employment of others. Business investment facilitates the delivery of improved products and services to consumers. Gaining wealth enables one to establish a personal trust fund or make larger charitable contributions. As we have seen, money in and of itself is neutral; it is how it is used that makes a difference.

The adage "it takes money to make money" is one of the oldest sayings about building riches. To lose money, unfortunately, you need money. Instill in your children the need to exercise caution in all financial matters. Never forget the cardinal rule of any daring enterprise: Don't put up money you can't afford to lose. Moreover, remind them that numerous multimillionaires did so after starting from scratch.

One of the most pervasive problems in modern society is debt. The "have now, pay later" mentality always ends up costing more in the long run. Some major high-street banks are partly to blame for this outlook. There were banners in the lobby of my own bank that read, "Why wait? Have it now!" The burden of debt can keep you stuck in a job you despise, add unnecessary stress to your life, and eat away at any progress you've made toward building money. You can't get rich if you constantly spend more than you earn. Instill in your offspring the importance of deferring gratification. Whenever possible, do without.

The gap between your income and your expenditures is the true measure of your financial well-being. It is rational, then, to avoid spending any more than necessary. Explain to your kids that being frugal is not the same thing as being cheap. Whose store are you more likely to buy from if you see the identical item for £20 cheaper and £40 more expensive?

Eventually, everyone gets pitched a "sure-fire" way to get rich quick, whether it's a three-card trick, a once-in-a-lifetime investment opportunity, or a limited-time business venture. Inspect these "opportunities" with a magnifying glass at all times. Do not give anyone any money, and keep in mind that anything that seems too good to be true probably is. Instill in your children the idea that accumulating wealth is an easy, time-tested, and logical procedure.

Ignorant question: Would you be in better financial shape now if you had acquired the following ideas when you were 10 years old and practiced them every day of your life?

Exactly why are you stalling? Instill in your children the ageless principles of making and sustaining a fortune. Typical of most parental counsel, it will go unappreciated at the time. They will appreciate it in the long run. Giving someone the gift of knowledge is like giving them the world.