Tips to Teaching Children about Wealth

As parents, teaching children about wealth is an important part of their transition into a life of adulthood. Our generation was not taught particularly about wealth creation, we were just basically expected to figure it out. But what is wealth? It is not just about having and saving money in your bank account; but having the ability to grow your money, by investing and having an eye for different opportunities in the economy.

Teaching children about wealth may seem too much but it’s not that difficult; because once you turn on that switch in their mind, you will start having those conversations, and your child will start paying attention to those things.

Money plays a huge part in wealth but it’s not just that in itself. Wealth creation needs you to have certain skills, you need to be able to earn money, but there are certain you should have as an individual; like being personable, trustworthy, having the ability to recognize opportunities so people can work with/for you.

Here are tips by which we can teach children about wealth and wealth creation…

Teaching Children about Saving

Children need to learn the basic concept of saving money. Why do you save? You save so that you have money for a rainy day. There’s a simple rule that says when you start earning, it will be good to have six month’s worth of salary saved aside for emergencies. That’s money that’s just there, easy to access or liquidate; that shouldn’t be money that you put in investments or real estate, but in a savings account that you just build up over time. So explaining to a child, why to have an emergency fund or account; because things can happen in life, people can lose their jobs, the business can shut down, so many things can happen. So it’s wise for you to save money.

Teaching Children to Have a Budget

Maybe you go shopping and your child wants to buy everything in the shop, that’s a perfect time to start having conversations around: “You know we have a budget, we can’t spend all our money on just everything you want, we have to plan for it”. Maybe you start letting them know that every month you are going to give them a small amount of money towards having fun. And then they can decide do they want to spend it on ice cream? Or do they want to buy a toy; but then they start getting the concept that you just don’t spend because you feel like spending.

Teaching them the difference between needs and wants is also easy to start doing from as young as seven, eight years old. And this is practical, so when you go shopping, with your children, look at the different brands of a product and talk about the different pricing and use as an opportunity to discuss.

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Ability to learn about earning money and value for skills

Parents can find avenues to teach their children how to earn money; be it summer programs, teaching your children the methodology of having a product and selling it is an important wealth creation concept for them. The idea that “you know what, we can make products and we can sell”, teaches them confidence. An example is abroad where families will have their children out in the summer with lemonade stands; it teaches children that they can make products and sell to earn money.

Also, we’re in a knowledge economy; it means an economy where you package your skills in the right way, and there’s no limit to how many people you can reach in a global economy. So when you teach your child early to identify what are their skills? What can they do with their hands? Can they write a book? Can they draw or paint? They will then tap into this knowledge economy early and be ready to play in that space as well as they get older because that is the future.

Teaching your Children to Invest

We spoke about wealth earlier as being the ability to not just make money but also the ability to grow money. This is where you want to start talking to your children about what it means to grow money. Some of those types of financial skills that parents have, if you’re not intentional about it, you don’t pass it on to the children. Children are not too young to invest in world trade, you just have to open up their minds and unlock the business side of them.

Degender Money

We must remove gender bias when it comes to wealth creation. Money responds to the person who understands how to earn it, and how to make it work for you. So let’s remove the gender biases that come with money conversations; like things that say women just know how to spend money, that’s all they know how to do. We need to make sure that we’re not using that kind of language in our homes when raising our children.

We should be raising both boys and girls to be their best selves, to learn, to access information, and to go after the types of careers that will make them thrive and give them joy.