Those of us who are parents to Gen Z or Millenial children probably have concerns for their financial future - how will their "want the best now" consumer habits work with skyrocketing property prices and university fees?
As a parent, I believe a key responsibility is to bring up our kids to be financially literate and responsible. This recent article in The Age (extract below) summarised some key tips nicely. The only point I'd add to this list is to teach your kids to "look after the pennies, then the pounds will look after themselves". (In terms of your mortgage, that might be a refinance - call me if you think your current interest rate could be improved).
So get talking to your kids - the earlier the better - about..
1. Mistakes you've made with money
Young kids love to hear about the mistakes you've made. It not only makes you seem a bit less infallible, but it lets them know that it's okay to make mistakes if even their parents aren't perfect. Potential examples that you can share include getting into credit card debt, not saving enough and wasting money on a splurge you didn't really need.
2. How you earn money (and use it to pay for family expenses)
The fact that our pay is so often direct-deposited - and that we make so many purchases online or with plastic - has made the exchange of goods and services for cash almost invisible. Talking about how Mum and Dad work hard to earn our pay so that we can turn around and use it to pay for our food, home and car is one way to make the virtual world of commerce a little more real.
3. How to be a media critic
Young children don't yet have the ability to view ads critically or tell the difference between an ad and a show, so as parents, we have to shield them and, as they get older, teach them how to be skeptical of all the promises that advertising makes, and know the difference between NEEDS and WANTS.
4. How to plan for big goals
When kids start asking for expensive things, as they tend to do, you can encourage them to draw a picture of what they want and consider different ways the family could save to make the purchase possible. It gets them thinking about trade-offs and delayed gratification. One of the biggest goals for the family might be saving for uni, and when your kids start asking about it, you can explain how you are making sacrifices to put money toward their education.
5. How to practice generosity and gratitude
Families vary greatly in their practices and attitudes toward giving. Try to incorporate some kind of gratitude practice into daily life, whether it's stopping to show appreciation for a meal or talking about what you appreciated or are grateful for in a weekly family meeting. The point is to take a break from wanting and to appreciate what we do have, which cultivates a feeling of richness in itself and also gives an opportunity to consider how we might be able to help others who are not as fortunate as we are.
6. How to be assertive (to companies and bosses)
Let your kids overhear you calling a company to ask for a refund; show your kids how it's done, because they may have to do the same one day. Similarly, help your kids practice asking for more money before they get their first salary offer so that they can learn the right words to use and can get comfortable with the concept of negotiation. Given the pay gap, girls in particular can benefit from this encouragement. My dad held this practice conversation with me the night before I negotiated my first job salary, and the subsequent conversation ended up netting me a starting salary that was $5000 higher than it would have been if I hadn't asked. Since future salaries tend to be based on early ones, that effort can pay off many times over.