I am not the kind of person who likes to tell other parents how they should do their job. Everyone has their own methods when it comes to raising children and in most situations there is no right or wrong way of doing things. But conversations between parents are often an invaluable source of ideas, so I’m going to offer some thoughts on the process of how to help your children become financially independent as they grow into young adults.
The behaviors that turn children into fiscally prudent adults can begin at a very young age. From spending and saving a little pocket money each week, to taking care of personal possessions and making the most of what they have, children as young as ten years old can put into practice actions that will lay the foundations for a financially stable, secure future.
The period of my children’s life I would like to talk about is from age 18 to 24, during which time both of my sons flew the nest and entered the wider world, where they faced various financial challenges as my husband and I slowly removed the financial comfort blankets and safety nets that they relied upon.
The first major financial hurdles involved giving my children the freedom and independence to go out and earn money for themselves in a way that would make them happy. For both my sons, this involved going to university and we were fortunate enough to be able to help them with their tuition fees and their rent. However, we insisted that they both used the free time that was plentiful in their first and second years at university to go out and earn their own money by getting part time work. The jobs they found in their university towns not only helped financially but also provided them both with a good foothold in their new communities and helped them to meet new people.
Both my sons were keen to learn to drive as soon as they left home, so that they could keep in touch with family and friends who were becoming dotted around the country. Funding driving lessons was not cheap and finding car insurance for young drivers at an affordable rate was not straightforward, but again my husband and I impressed these facts on our sons and made sure they contributed to the full costs of driving, so that they knew it was a luxury rather than a given right.
The children made their way in the world fairly sensibly in those university years, living cheaply in terms of food and clothing and taking advantage of deals and offers that allowed them to live the lifestyles they chose.
But once they left university and entered the world of work, new financial pressures, challenges and temptations arose. My youngest son particularly found the responsibility of earning a salary difficult to manage and we found he came to us for help more in those first years of working life than he had at university.
Given that time again, I would have spent more time with him to help him put savings in place at an early stage. He was well into his twenties before he knew enough about pensions or ISAs to go about setting them up and he was needlessly frittering much of his disposable income rather than putting it away.
The pressure on young people to own the consumer goods that fit their lifestyles is immense in 2011, as was clearly evident during the riots that showed the destructive force of materialism when young people looted shops and warehouses.
The need to impress on our children the value of experiences, friendships, knowledge and skills above the value of material goods has never been more urgent. While neither of my children are overly materialistic, I still feel I could have done more to steer them away from the temptations of fancy electronic goods and personal credit offers from financial institutions that ultimately left them with debts to pay on top of their student loans during their twenties.
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The earlier the better. Each kid is different, but as soon as they can understand they should be involved with setting up bank accounts, saving some of what they earn, learning ways to earn money.
I agree, the earlier the better. Kids should understand as soon as possible.
Absolutely Michelle! I’ve already began teaching my oldest son, who is 5 about the basics of personal finance, why debt is bad, how to avoid it, and why his decisions “today” will effect him tomorrow. 😀 If you asked him if it was okay to borrow money for something he didn’t have the money to pay for, he would say no. I’m already giving him a commission (as opposed to an allowance) for doing little things around the house like feeding the dogs and making his bed which is giving him some responsibility over his money, though not much, right now. He spends, saves, and gives and is beginning to learn the value of his hard work. As he gets a little older I’m working on a lesson plan that will show him a real life example of what does to his money.
The earlier the better sounds good to me. SO many young people have financial issues today with credit cards and the like not just because credit was too easy to obtain but because they have no fiscal knowledeg or aptitude. I made my kids do chores for their pocket money so that the connection between work, effort & reward was made early on and hard wired into their brains. That has severed them well. I also think schools should have life lessons as well that teach good fiscal & financial management skills to kids.