Money Lessons to Teach Your Children
Are your children learning good money habits from you? “Save up to buy shares in Nike before buying another pair of Nike shoes,” was the life-changing advice that Damon Williams, a teenage entrepreneur got from his mom, April Williams. The result, at 14 years old, her son, Damon, grew his net worth to more than US$50,000. Damon’s story is a hallmark of how parents can teach their children, the invaluable lesson of investing and saving at a young age. As a result of COVID-19, more parents are able to spend more time at home, homeschooling or simply bonding, as such now is also a great time to teach or reinforce money lessons.
Financial experts agree that stories like Damon’s demonstrate one of the best ways to begin teaching children about money management and saving techniques. Start teaching your children practical money lessons and even create some new ones with the help of these tips below:
1. Budgeting Lesson: Managing your expenses especially in times of uncertainty and/or of reduced income is critical to your survival. Now is a great time to help your children to understand realistically the cost of items and make the connection between using water, light, buying snacks and toys, etc. and the corresponding expenditure/cost.
• ‘Every Mickle Makes a Muckle’: Involve your children in your monthly budgeting, so they can determine their wants vs needs and the importance of conservation. You can make it a game for them to determine the daily expenditure, by dividing the monthly bills by 30 to find an average daily cost, and then the yearly expenditure by multiplying the daily cost by 365. It is amazing how little costs can add up! Give your children the “Ministry of Conservation,” portfolio with the responsibility to suggest and implement conservation ideas and track expenditure before and after their conservation “policies”.
2. Cash Purchase vs Loans Lesson: Loans are not bad, but many children do not grasp that loans cost more, and consume future cash that could be used for other purchases or investments. At this time, you will also want to preserve your cash and only take a new loan, if necessary. If you have other loan payments continue making payments regularly, but if you are having financial challenges be proactive and ask your financial institution to defer payments or reduce interest payments. Use this opportunity to share with your children the difference between a cash payment and a loan, asking them to calculate how much more the loan costs vs. buying it cash.
3. Be an Owner Not Just a Consumer Lesson: When walking the supermarket aisle ask your children, to identify products they like and you can tell them how they can be shareholders of these companies by buying shares on the Jamaican Stock Exchange (JSE). For example, if they like Vienna sausage or Frosted Flakes they could save to buy Grace Kennedy shares or Lasco shares.
Appoint your children “Ministers of Investment” and offer them the opportunity to invest the money they have saved, with your help, in becoming an owner of some of these companies. The money saved can be used to buy and sell stocks using JMMB’s Moneyline or invested in one of JMMB’s unit trusts such as JMMB Income and Growth Unit Trust.
4. The Importance of Giving Lesson: Even though you may not have as much disposable income, you and your children can identify a person or organization in need and help, without busting your budget. Some examples of how you can help others include: delivering groceries or medication to an elderly neighbour who may be more vulnerable, or saving loose change in a jar, and use it to buy some food or sanitary items for someone in need.
Do you want your children to be financially successful? Allow your children to apply the money lessons to their lives, even as you lead by example.
Written by Michelle Sinclair-Doyley
Manager, Group Financial Partnership Support & Financial Education, JMMB Group