Who remembers receiving $20 in a Christmas card from a relative? Or maybe it was $5 or $10, depending on how far back we\u2019re talking.<\/p>\n\n\n\n
And whether you\u2019d already spent it in the time it takes to receive an extra-long hug from THAT Aunty, or you\u2019d deposited it straight into your savings account with THAT bank, or you\u2019d invested it into your latest and greatest money-making venture \u2013 there\u2019s a good chance that those same money habits are with you today. <\/p>\n\n\n\n
If you\u2019re thinking about gifting some cold, hard cash to the little ones in your life, then have a think about how you can help them develop a good relationship with money, because as we all know: old habits die hard.<\/p>\n\n\n\n
Giving cash is probably more useful than ever in today\u2019s increasingly cashless society, because it gives kids a more tangible insight into how money works.<\/p>\n\n\n\n
Here are five ways to help children think about money:<\/p>\n\n\n\n
Note: We\u2019re not saying there\u2019s a right or wrong way when it comes to someone\u2019s money mindset, but we\u2019re big believers that knowledge is power.<\/em><\/p>\n\n\n\n Tell them about the money jar concept, where they\u2019d portion out their money into key categories: save, spend, invest, donate, and then have to decide upfront how much they want to devote to each. Using physical jars helps kids understand an otherwise abstract idea. When they\u2019re making decisions about where to send their money, they can see that they\u2019ve only got their allocated funds to work with, and so it helps them learn to be more disciplined and purposeful with their decision-making.<\/p>\n\n\n\n Talk about opportunity cost, so when they\u2019re deciding on whether to buy something, highlight what they\u2019d be missing out on. Little Ryan wants to go on that $20 ride again? Remind him he won\u2019t have money left to buy the showbag. Sounds a bit like being Fun Police, doesn\u2019t it? But before long they\u2019ll be pre-empting you and considering the opportunity cost before you\u2019ve had a chance to prompt them.<\/p>\n\n\n\n Talk about the difference between good debt (debt that allows you to invest in wealth-building channels like property), and bad debt (debt that costs you). For example, if they ask for a $50 loan, charge them (a nominal amount of) interest. Get them thinking about whether they want to pay compound interest, or earn it.<\/p>\n\n\n\n If you\u2019re living a comfortable life, kids can get the impression that money grows on trees, right? Think about letting your kids know how much money you earn, and what\u2019s involved (i.e. the long hours, years of education and training). Of course, you may want to tell them not to bring it up at Christmas lunch \u2013 we\u2019re not necessarily suggesting you become that transparent!<\/p>\n\n\n\n Setting up a very modest portfolio can be an incredible way to introduce children to the concept of trading shares. With the various apps around these days, the barriers to entry are not what they once were, and trading shares certainly isn\u2019t just for trust fund babies. Make sure you speak to your accountant and\/or financial adviser for guidance around the capital gains benefits. <\/p>\n","protected":false},"excerpt":{"rendered":" Who remembers receiving $20 in a Christmas card from a relative? Or maybe it was $5 or $10, depending on how far back we\u2019re talking. And whether you\u2019d already spent it in the time it takes to receive an extra-long hug from THAT Aunty, or you\u2019d deposited it straight into your savings account with THAT […]<\/p>\n","protected":false},"author":1,"featured_media":46,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/posts\/45"}],"collection":[{"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/comments?post=45"}],"version-history":[{"count":1,"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/posts\/45\/revisions"}],"predecessor-version":[{"id":47,"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/posts\/45\/revisions\/47"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/media\/46"}],"wp:attachment":[{"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/media?parent=45"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/categories?post=45"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.capefinance.com.au\/wp-json\/wp\/v2\/tags?post=45"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}1. Money jars<\/strong><\/h4>\n\n\n\n
2. Opportunity cost<\/strong><\/h4>\n\n\n\n
3. Compound interest<\/strong><\/h4>\n\n\n\n
4. Radical transparency<\/strong><\/h4>\n\n\n\n
5. Invest in shares<\/strong><\/h4>\n\n\n\n