There are several reasons why parents generally do not equip their children with a good financial education, probably one of the most useful lessons to navigate through life. For starters, most adults are not financial experts and know little about prudent money management, whether it's savings, investment, or retirement planning. Without encouragement, of course, to argue, a reality is that mothers are often the main caretakers of children and, therefore, should be in the front line with regard to the financial education. However, too many women are still not actively interested in issues related to finance and prefer to leave this to their partners. In addition, there is still the antiquated belief that you should not talk about money, because it denotes bad education: if you talk too much, or if you know a lot about it, it means that you are a materialist.
Teaching our children the importance of budgeting is essential to help them become well-educated adults. Linked to this, we find the importance of helping children develop their ability to delay gratification, for in this world of instantaneous information and quick solutions it is important to learn to work and save to achieve a goal. The rewards will be much sweeter.
It is also important to teach children that being smart with their money is not just about saving. Managing money also means spending it wisely. Children must be prevented from becoming what Neale Godfrey calls a "compulsive saver": a teacher who avoids paying at all costs or manipulating others to give him money. For the extreme saver, hoarding cash does not always have to do with the love of saving, but rather with the fear of spending. Ruthless saving can be as dangerous as uncontrollable spending and it is important that you explain to your child the importance of maintaining a balance between the two. Nor should we underestimate the effect that the parents' own habits with money, good or bad, will have on their children.
A weekly allowance is a good starting point because it teaches children the value of money. If they are very small this can be used as a teaching tool, for example, by giving them pocket money equivalent to their age (5 euros if they are 5 years old, and so on). In any case do not worry too much about how much to give them – although it is advisable to talk with other parents to have a point of reference. The crucial thing is to help them use this pay wisely: they must understand the need to set aside some money to save (in order to achieve an objective), spend (sweets and things like that) and share with others (gifts or contributions to NGOs when they are somewhat older – always channeled through parents-, for example). Obviously this will not work with teenagers, for whom the most important lessons are based on the two C's: credit cards and capitalization. If you understand the risks of the first and the value of the second, we will have traveled half the way.
Try to involve your child in some financial decisions. For example, if you go shopping at the supermarket and you have to decide between two products, explain why it makes sense to buy the best valued alternative if the quality is similar. Offer some of the money you have budgeted so that your child can make part of the purchases of what they will eat later (for example, fruit). Always make sure that the learning process is fun and not a chore. Managing and managing money is part of adult life, and you are the key to your child addressing financial issues with confidence, rather than fear or ignorance.
Finally, do not let the "I want, I want …" end in disputes and tears. Instead, see it as an opportunity to teach finances to your children. You do not need any textbook: the world is your class.