Highlights in this issue:

*** Don’t want your child to turn into a spoilt brat, then listen up…
*** Putting money matters into perspective is a real eye opener – no matter how old you are…
*** Money management: The single most important gift you can give your child... and more…

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From the pen of Karin Iten

Dear Investment Academy Reader,

I remember working for my weekly allowance when I was younger. Although the sum of my chores included raking up the leaves, the occasional bout of weeding and a rather smelly (and unmentionable) task involving my dogs, I’ll be forever grateful to my folks for instilling the value of money in me at an early age.

There was nothing more exciting than popping into the local Spar to spend my earnings on a handful of Chappies and the latest Casper the Friendly Ghost comic. (I’m equally glad I was too young to remember how many times my dad had to chip in to help me “buy” what I wanted.) Be that as it may, it was a vital lesson.

As a parent, it’s your job to take care of your kids and meet their needs. You supply all the essentials (and most of the niceties). But you also need to make sure your kids have their own money too. It’s important to teach your kids the skill to manage money effectively. That is, unless you want your daughter or son to grow up as a spoilt brat (who spares little or no thought on what things actually cost). Simply forking it out deprives your child of an essential tool they’ll need throughout their lives: The skill to manage money effectively.

So here are my top five tips to teaching your child the value of money the fun way!

Tip #1: Play money games
Money games, like Payday and Monopoly Junior, are fun ways to help your kids understand what money can be used for. These games are more real than they first appear. Not only do they teach kids about buying assets, they also touch on issues such as debt and even hidden costs (like those awful municipality “fines” in Monopoly).

Tip #2: Let them keep the money safe themselves
With the consumer needy society we live in, today’s kids want for nothing. As such, money’s becoming an ever more popular birthday and Christmas gift. So, instead of keeping the money for them, encourage your child to save all (or part) of their cash for a “special” purchase. Remember, before they spend it, sit down and chat to them about choosing wisely.

If you can’t make your child recognise a ridiculously expensive item they “just have to have”, why not put the cost into perspective for them. I remember wanting a really expensive pair of boots when I was about 13. When I asked my mom if she’d get it for me, she told me the boots were worth four days’ of her teaching salary. Naturally, she said no. But she did promise to go half if I could raise the remaining half myself. After about a week, I realised just how much this would eat into my savings and the boots went to the home of another lucky girl. What an eye opener!

Tip #3: Let them see it grow
I love piggy banks and these days you’re spoilt for choice. But, before you spend a ton of money on a cute, old fashioned ceramic pig, consider this: The best kind of piggy bank is one that lets kids see their money grow. Go transparent!

Don’t forget to encourage them to save any change they have at the end of a shopping trip (grocery shopping is an important part of the learning curve). And remember, any money they receive from the tooth fairy should go in their piggy bank too.

Tip #4: Be flexible
We’ve all wasted money on things we didn’t need. But, at the end of the day, it’s your money. And it’s the same for your children. So be supportive. Encourage them to spend wisely, but let them discover the consequences of bad monetary decisions too. They’ll thank you for this later.

Tip #5: Make them earn it
Yes, it’s essential your child has an allowance, but at least make sure they earn it. Although you should cover your child’s “necessities” with a fixed income, have a job list up on the fridge that gives them chores to do for extra cash.

Implement just a few of these simple tips and your children will be money smart and more responsible members of society.

Here’s to your financial freedom,

Karin Iten
For the Investment Academy