» Useful Lessons to Teach Kids in an Economic Downturn

Do YOUR kids think there's one of these growing in the garden?

The Importance of Savings
Whenever you get some money, whether you’ve been given it or earned it, don’t be tempted to spend it all. Make sure you put a proportion on one side as savings. Not savings for something specific, savings that can be a buffer for those times when money gets tight or you have unexpected expenses. And if you need to dip into those savings, replace what you took as soon as you can.

The Benefits of Planned Savings
Make sure your savings earn you money. As a young child, knowing the number of coins you’ve got in a piggy bank is growing is a good incentive to save. But as soon as possible you should get this money working for your child. Investigate savings accounts geared towards children but don’t automatically choose one of these unless it is a good investment. Ideally you should find a savings account that pays interest gross, so your children don’t lose money in unnecessary taxes. If you can find an account that pays monthly interest and encourages regular saving, all the better. And consider using a notice account where they can’t just withdraw money whenever they want. You could get a better interest rate that way.

Really Making Your Money Work for You
Show your child the benefits of compound interest, either through their own account or yours. Show them that money saved earns interest not only on the original amount, but on the interest itself. Get them to see savings as a way of acquiring extra money without doing anything for it – apart from not touching their savings of course!

It’s Worth Waiting
Always apply the concept of ‘wait a while’ when your child wants something, especially something expensive or ‘hot off the press’. Instead of buying it straight away, agree to wait for an agreed period first. This will do several things:

Firstly it will show whether the article is really wanted. If, after waiting three months, your child still wants to purchase then it’s a committed buy, rather than a whim. But if they’re no longer that interested, they haven’t wasted money on something they would have quickly grown tired of.

Secondly, and particularly if the article was a new release of something expensive like software or cell phones, the price may well have fallen. Anyone who buys into a technology product as soon as it’s released is spending money they don’t need to. Often after only a few months these products can show significant price reductions. The opposite side of this is that similar products, or earlier versions, may also show price reductions in an effort to maintain market share, so there could be other bargains to compare the original item against.

Thirdly, it will show your child that, despite what the marketing people or their friends say, it IS possible to survive without those ‘must have’ items. This begins to break the hold of the instant gratification culture.

Money Isn’t a Dirty Word
Talking openly about money is a good thing. Many families try to shield their children from discussions about money, especially if they are having difficulties or worried about paying bills. But if you don’t share this with your children how can you expect them to ever develop a realistic understanding of money?

If they aren’t involved in discussions about budgeting, cutting back, changing spending habits etc. you’re doing them a real disservice in preparing them for future life. And if they don’t understand your financial situation they can’t give you their support. Don’t underestimate your kids: if they know cutbacks are needed they’re likely to come up with their own ideas, both for cutting their own spending AND for cutting back on household expenses.

Money Isn’t Everything
We live in a society that has been persuaded to believe that the only things worth having are those that cost money. We’ve been lulled into the false belief that anything that’s cheap – or free – is inferior. But that’s not always the case.

A country walk with a picnic prepared at home costs little money-wise, but pays dividends in terms of the quality time you all get to spend together.

Family efforts like tidying the yard or clearing the garage can be great fun and lead to other activities, such as collecting a stack of items to sell on eBay.

Growing things is an excellent way of teaching deferred gratification: that plant is going to grow in its own time, however much you want to rush it. And if you grow edibles as well as garden plants you get a double benefit. There are lots of things that can be grown in pots, tubs or window boxes, and that are easy enough to care for that the kids can be given partial or complete responsibility. When you’re eating salad with tomatoes, peppers and lettuce grown by your children, their satisfaction and your pride are priceless.

Get the kids involved in staging their own entertainment. Older children could act out stories for younger ones. You could search the web for puzzles or questions and put together your own quizzes and competitions with prizes. Sort through old photographs and start to build a family tree. The possibilities are endless. All it takes is a little imagination.

With older children get them exploring career ideas on the web to start preparing for their own future. The more they learn now, the better prepared they’ll be when they need to make decisions about college and employment. And you will be better prepared to support them, and avoid costly mistakes from hastily made choices.

Many activities that cost money offer temporary satisfaction, and need a regular ‘fix’ to keep that going. Substitute lower cost or free activities that develop your child’s own internal resources: their sense of responsibility, creativity, self confidence, real social skills (as opposed to exercising their texting thumbs), reasoning skills etc. and you’re giving them a priceless gift for life.

Money Doesn’t Bring Happiness
There are many examples of people with lots of money who are beset with difficulties – just read the pages of any celebrity rag.

More difficult to find, there are also examples of people enjoying a satisfying, fulfilling life on a low income.

That’s not to say that money can’t result in happiness, but just possession won’t do it. What you do with the money you have is far more significant than the amount you possess. If you use money to facilitate real life choices (we’re not talking about designer trappings here, but things of real value) then the outcome can be positive. And if you can create happiness on a limited amount of money, you’ve found the key to a good life.

Make sure your children don’t make the mistake of equating money with happiness or a trouble-free life. The more realistic their attitude towards money, the better chance they have of avoiding the pitfalls of worshipping at the altar of materialism.