Behaviour is learnt from your parents, observes Hadia Baassiri, a social worker from North Parramatta in Sydney's west.
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It is a maxim that she extends to children's attitudes towards money.
Baassiri recalls her father giving her pocket money once week with the warning that she could spend it as fast as she liked, but there would be no more where that came from until the following week.
Later she learnt "not to become a victim of the big sales".
The Sydney mother says of retail sales: "People buy things they don't need."
Baassiri similarly taught her now-adult children how to budget.
It is a lesson financial advisers wish was higher on the dinner table curriculum of households in Australia.
"I see so many parents who give their kids everything," bemoans Deborah Kent of Integra Financial Services.
"Kids become very conscious about brands because that's what they've grown up with. The kids will go on to get themselves everything they want and may have to use credit to afford it. They end up on a wheel of debt. You've got to teach them good practices with money," argues Kent.
My own father extended budget lessons to the annual, obligatory visit to Melbourne's Royal Agricultural Show. My sisters and I were given $10 each (those were the days), which afforded us a combination of three show bags and/or theme park rides.
It was a truly painstaking affair. The budget process took hours, as we dragged Dad to every stall at least twice as we studied the contents of each bag. But we learnt about value for money, allocating scarce resources and spending within our, or at least our father's, limits.
There are several key lessons worth teaching children, say the experts.
Here are five lessons, courtesy of Kent and Olivia Maragna of Aspire Retire:
- Teach them to save when they are very young. Provide pocket money and use a piggy bank so children can touch and count the coins.
- Explain what you are doing as you purchase items.
- Set up a bank account and make a trip to the bank an exciting event. Show your kids how they can watch their balances grow.
- Make sure children understand that their pocket money is for their purchases and that if they want a more expensive item, they will need to save up and wait.
- Encourage children to perform chores for money so they understand the link between work and income. "Don't just go and give them money," says Kent.
'He knows how important it is to save'
As a sole parent, Ramona Kastrup has ensured that her son is aware of the cost of things and the difference between needs and wants.
Sebastian, 8, knows the rent and bills have to be paid before there can be a shopping trip for Lego.
This was also the way Ramona, 46, was brought up. Her mother died from a heart attack when she was two, leaving her father – who was also raised by a sole parent – to care for three children.
"I say it's tough being a sole parent but I've got it pretty easy compared to my dad, who in those days as a widower got no help from the government and had to work three jobs," says Kastrup.
In turn Kastrup, a gym instructor in Melbourne's southeast, learnt to be practical and independent, traits she is passing on to her son in her disciplined approach to finances.
Sebastian is expected to complete jobs around the house, such as putting his dirty clothes in the laundry and dishes in the sink. "I had him vacuuming yesterday because he had crumbs everywhere and I said I'm sick of doing that," says Kastrup.
Sebastian does not receive pocket money but is allowed to buy a beloved Lego set every few weeks.
"I also use this as an incentive for him to work on his reading and writing." Any gifts of money Sebastian receives go into his bank account. The current balance is $6000.
Says Kastrup: "He knows how important it is to save. My dad gives him coins here and there and says 'leave it there'. He's very close to Dad."
Case study by Natasha Hughes
The information in this article should not be taken as financial advice. Please consider your personal circumstances before making any financial decisions.
