So, recently, my 2 children have had birthdays – one just turned 5, and the other just turned 8.
At what age do you decide to teach them about money?
Well, between the ages of 0 and 7, children have what we call their ‘imprint period’
– this is where their values are imprinted, their ethics, and how the generally see the world.
From 7 to 14 – it’s called their ‘modelling period’
– a time when they begin to look up to people and start to emulate them.
So for me, this age of 6, 7 and 8 years old is very important, and is a good time to begin to teach them. But what do you teach them exactly.
Well, you could teach them that they have to work hard, get good grades, get a job and so on. That’s what I was taught, my dad was self employed and worked a lot of hours, and so you begin to feel that this is what you must do.
However, there is another way, and it is that you can teach them to create an ‘asset’ – something that they buy or create just the once, and it keeps putting money into their pocket long after they have bought it.
That’s exactly what I taught my 8 year old, and my 5 year old was sitting there at the same time. This is what I told them.
I began to explain that for some people, they have to get up and go to work each day – whenever they aren’t at work, then they don’t get any money.
I then explained that there are some people, like daddy, that get paid regardless of if they get up and go to work, and that’s because I’ve already done the work some time ago, and continue to reap the benefits of doing so.
The method I said, was to buy a house, and then rent it out. So if daddy has a house that costs £300 per month, but the rent is £500 per month, then I earn £200 per month each and every month.
Then I asked the eldest how much money I would have each month if I had 10 of these houses for example, and she worked it out.
I drew a picture of all of the houses, so that she could see each one, see how much money it brought in for each one. Once she had worked it all out, I saw her eyes light up and the realisation had slowly begun to sink in.
I then explained the difference between those that got up and worked each day, and those that didn’t was because the house was the asset, but it didn’t have to be. It could be a website that has people who visit it and buy things, in which case the idea was to drive more and more traffic to it.
I also explained that it could be you wash cars, and get all your friends to wash them whilst you just look after bringing in the income – and that’s how businesses work.
We’ll cover it again as she grows older, and the understanding begins to sink in that little but more – but I already know she is now looking at things slightly differently and now questioning why you go out to work every day.
My aim on this is to get her to the point where she can make her own decision as to what she would like to do when she gets older.
In the meantime, we’re also talking about University, something which she completely discounted just a year ago, and now she has a much bigger interest in going.
As your children transition from the imprint period to the modelling period, it’s important that you send the right messages, and try and ‘expand possibilities’ – that life isn’t set on just going to and from school but that the world is much, much bigger than that.
I want both children to understand that they can choose how to live their lives, and not settle on what they get ‘given’ to them.
Send the right messages, and provide them with support, and they’ll amaze you.
Just a few weeks ago, my eldest came home and got some paper, drew some pictures and cut them into strips and asked me to laminate the strips which I did.
When I asked why she was doing this, her response was that she was going to sell them at school for .25 pence each, and that all the money was going to Great Ormond Street Hospital. A nice little daddy moment that was, a chip off the old block.
The fact that all the money was then going to charity was an unexpected bonus. Of course, my partner being a school teacher, was a little bit worried about her selling them at school – I just told her to go do it – until she gets told not to. There are lots of times when you’re older in life that people say you can’t do something – I got told many times and still do .. I just ignore them also and that’s one of the reasons I get the results I get for both myself and my family.
Teach them, and teach them well, the world is full of opportunity, and people will try and switch them away from it – teach them to go through with their ideas, if they follow everyone else, they’ll just be like everyone else – and that’s not good enough for me.
The kids education begins as a baby, is reinforced by school, but ultimately, its the parent responsibility to continue to teach them, to help and support them – this is what will help make your child more successful, and I know 100% that it’s my duty to do so.
Good luck !
Author : Daniel Latto