When most of us think about leaving a legacy, the first things that come to mind are things like establishing a successful career, becoming a good parent, and continuing cherished rituals within the family.
However, you can also leave a lasting impression on your children by passing down to them the values and practices that were instilled in you by your parents and grandparents. You can do this by setting an example for your kids to follow or by listening to the guidance they give you.
What kinds of economic legacies are South African families leaving for their children in a country that is both culturally and economically diverse? This is the question that needs to be answered. In terms of people’s relationships with money, families are an extremely important factor to consider.
Children begin to pick up on their parents and other adults’ spending patterns and behaviors at an early age, whether those patterns are good or bad. These are the kinds of behaviors that are simple to instill in one’s offspring. For some people, the importance of setting a budget and saving money was instilled in them at an early age, while for others, the concept of setting a budget and saving money is completely foreign.
Clyde Parsons, Chief Innovation Officer at BrightRock, a company that provides life insurance, suggests the following five important and smart money habits that parents should pass down to their children.
Don’t Ever Enjoy Living Further Than Your Means
In today’s society, it is much too simple to spend more money than one brings in. Lending options, credit cards, and prepaid cards all present enticing opportunities that are challenging to turn down. The concept of “Keeping up with the Joneses” is introduced to children at a very young age. This occurs when children see their peers engaging in activities such as wearing designer brand-name clothes and shoes or always having the most recent video game console. Teach your kids the importance of each rand and help them understand how rapidly their money can be used up and how quickly their loans can spiral if they develop expensive hobbies.
Save, Save, and Save Some More
It is important for children to comprehend the notion of saving money for costs that they cannot anticipate, such as having their mobile phone broken or having a pair of shoes stolen. In addition, stress the significance of putting money aside for things they desire rather than incurring debt to pay for them. Children can learn the value of saving money by using something as simple as a piggy bank, which is a great tool. Children are natural negotiators; therefore, it is important to encourage them to hone their negotiating skills and teach them how to put those skills to use when they are responsible for managing their finances in the future. Instruct them to look for opportunities and value wherever they go.
Steering Clear of Falling Into the Debt Trap and Owing Money is Often One of the Most Stressful Things in Life
Showing your kids concrete and graphic instances of how the monthly interest paid on credit cards is a waste of money of their hard-earned cash with completely no return is an excellent way to emphasize how debt drains your finances and is a good way to teach them the importance of avoiding debt. In the event that they do get into debt when they’re older, however, make sure they understand how critical it is to pay off debts with the highest interest rates first.
Prepare for the Worst-case Scenario
You don’t even know what fate will throw at you, and it is therefore so important to have needs-matched life insurance. In the event that you or one of your partners suffers a serious illness, becomes disabled, or passes away, your children will be able to maintain their standard of living because you will have adequate protection in place to safeguard your assets and liabilities. Ask your financial planner for coverage that can be adjusted in accordance with the changes that occur in your life; needs-matched coverage will help you save money while providing you with more protection.
With a solution that is tailored to your specific requirements, you can typically obtain forty percent more coverage for the same amount of money. In addition to this, it is a smart move to start teaching your children early on how they can prepare for the unknown. Instilling a strong sense of accountability in them will allow them to safeguard their financial situation from the moment they receive their first monthly paycheck onward. Instead of simply putting the money away each month and then forgetting about it, you should motivate them to constantly evaluate their savings goals and adapt them to reflect any changes in their needs.
Adhere to Your Spending Plan
Teaching your children how to create and stick to a budget is presumably among the most crucial pieces of advice that you can give them. They should be very comfortable with the idea of making preparations in advance and cutting back on expenses that aren’t necessary. Teach them the distinction between things that are luxuries and things that are necessities, as well as how they should think about how they ought to spend their money. Make sure they are aware that any money they have left over at the close of the month should be saved as soon as possible. In other words, the sooner they start, the better.