"Healthy money habits to teach children"

Setting a good example and some tips can help.

Many would agree parents actions with money can affect their children’s behaviour, lasting well into adulthood. This puts the onus on parents to help children have the skills to make smart financial decisions – from learning about the importance of saving to the power of compounding interest.

But did you know that you could be sending negative messages about money to your children without meaning to? Here are some common ways you could be teaching them unhealthy money habits – and how you could send constructive messages instead.

Revealing the magic behind digital money

Your children likely have seen you pay for hundreds of transactions without glimpsing cash changing hands. In this age of digital payments and credit and debit cards, teaching kids the value of money is not easy. For small children, it can appear that money problems are solved with magic – just wave or tap a plastic card.

This makes it doubly important to discuss money with your children. A good way to start may be to explain how your earnings get deposited into your bank account and how you use this account to pay your bills and other expenses. For older children, consider showing them how taxes are deducted and how savings for investments, education and retirement need to be accounted for. You could even bring them with you to a meeting with your financial adviser.

Spending wisely

While it’s normal to spend on a whim every now and then, frequently buying things on an impulse could send the message that it’s fine to spend without planning.

The key to avoiding impulse-buying is to stick to a budget. To set an effective budget, consider working with a professional financial adviser. Your adviser may help develop a budget that factors in your income, expenses and financial obligations to help you rein in discretionary spending.

Once you have a budget, it may be worth talking to your children about it – how it works, why you use it and how it helps your family’s finances.

Teaching independence

It’s convenient to do everything for your children, from paying for their sports or music lessons to taking care of their phone bills. But by giving them a chance to have their own money and decide how and where to spend it, they could learn powerful lessons about budgeting. If they end up blowing all their money at once, that’s fine. They’ll likely learn a lesson or two.

For adult children, offering them financial help or bailing them out frequently can create a cycle of dependency. Letting them make money decisions on their own could help them develop financial responsibility.