How to encourage your kids to spend wisely


When it came to education, reading and writing was probably one of our parents’ first main priorities. With the advent of laptops, tablets and the internet, children today are able to pick these skills up pretty much on their own – even if it is only to get to the next level on a video game.

One ability which still needs to be taught – and something of which an occasional reminder does no harm – is how to use money wisely.  Here are a few basic suggestions of how to go about this:

Set out values

Your own ideas of what constitute important expenses form the basis of your own decisions and for educating your children. If you do not agree with what you do with your money, you do not get any pleasure from using it. These values need to be consistent with your partner/spouse so that your child can understand them quickly.

The sooner you start, the better

Ideally, you should start educating your child on money matters as soon as they are born. Of course, this does not mean a class on double-entry book-keeping before she/he can talk! However, as with other skills, if you introduce your little one to money decisions from the beginning it becomes second nature and is a skill for life.

Wants vs. Needs

It is important to enable our kids to distinguish between what they want and what they need. Every child ‘needs’ the latest hand-held, 3D, HD games console. However, if we teach them to live within their means, they will soon understand that such items are a bonus – this will help them with the big decisions in the future.

Install the Pay Yourself First principle

It is a common mistake to consider saving as putting money aside, which invariably ends up a lesser priority than a new phone, clothes, etc. To save successfully, you should always use your income to pay your savings account first, before anyone or anything else. Install this habit into your kids and they will accumulate enough to pay their own way through university!

Go beyond saving

Whilst saving is fundamental, we should also teach our kids that the goal behind saving is not to be able to buy something more expensive, as soon as they have enough money. From the very beginning, try to expose them to things where they could actually earn money.

Everyday things can be educational moments

You don’t need to use slides and stand at a lectern to give a class! Those mundane tasks, like counting coins to buy a newspaper or buying the groceries can become useful lessons on the value of items. Of course, teaching our young ones about hard work and patience are as important in money matters as anything else.

Balance Sheet

For children who are a little older, it is a good idea to show them how to put together a statement of assets, liabilities and net worth. Showing them how much they cost you against zero income may be a little harsh; but if we teach our children early on about incomings and outgoings, they will understand financial matters more easily.


Apart from enabling children to be confident enough to learn without making mistakes, giving them self-esteem means they are less susceptible to peer pressure to have the latest or nicest material possessions. This in turn helps us as parents as we face less pressure to spoil our children – although the temptation is always there!

Using money to help others

Finally, we should show examples of how money can be used to help those less fortunate – what charities do, for example. This helps our kids see that money is not just for spending, but also for helping improve people’s lives.

The above data and research was compiled from sources believed to be reliable. However, neither MBMG International Ltd nor its officers can accept any liability for any errors or omissions in the above article nor bear any responsibility for any losses achieved as a result of any actions taken or not taken as a consequence of reading the above article. For more information please contact Graham Macdonald on [email protected]