Sad but true 'how to manage money' is not a subject taught at school. Children have to learn all their attitudes to money at home from their parents. We all diligently teach our children road safety, how to swim, how to drive etc and rightly so. But how many of us consciously teach our children the invaluable life skill of handling money.

We all want our children to have the best and not to have to go without, that is just the parenting instinct. But take a minute and think what lessons your children will be taking into adulthood. We live in a 'I want I get' society. Instant gratification is the name of the game. Children (and their parents) are bombarded with advertising for every type of consumer good. Buy now, pay later, why worry. If you don't teach your children how to financially take care of themselves, who will? Having good money management skills sets your children up for a secure financial life.

Let us now look at some ways we can communicate good money management skills to our next generation.

- Talk to your children about money. Don't make money a mysterious or taboo subject. Explain how money works. Where it comes from, where it goes.? Explain that Mum and Dad have to go to work to get the money to pay for the things that they buy. I know it sounds obvious to us, but a lot of children have no idea how all this happens.

- Explain the budgeting process to your children and encourage them to participate in drawing up the family budget. If children understand what you are doing and feel a part of the process there is a greater likelihood that the family budgeting process will be successful.

- Help them to understand the difference between 'wants' and 'needs' and how we prioritise our spending. We 'need' certain things to survive, food, shelter etc and these are the things we pay for first. Our 'wants', things we like but can live without, we only purchase after our needs are met.

- Let your children handle real money; notes and coins and explain to them their value. With so many purchases made on credit, children often don't get to handle real money and to understand its value.

- Take your children shopping with you and explain to them why you purchase the items you do. Why one is cheaper or better value than another.

- Teach them to shop around. How to look for specials, and how items are discounted at sale time.

- Explain some of the language of money to your children. Tell them how interest works, how a mortgage works, how credit cards work.

- Show them a bank statement and let them see how money gets deposited and withdrawn from your account. Some children think that ATMs are just magic money dispensers. Explaining where the money comes from and goes to helps them to understand that it is not a limitless supply.

Pocket Money

Giving children pocket money helps them learn responsibility and how to control money. How much money and at what age is a difficult question, but ask around the other parents of similar aged children and you will get a feel for what is appropriate. You must also decide what sort of items your child will need to spend their pocket money on. Is it just for extras, like toys and treats or do you want them to start to take responsibility for some essential expenditure like school lunches, fares etc. As your child gets older, giving them these extra financial responsibilities will help them learn how to priorities their financial choices.

Requiring your children to perform certain tasks or chores to earn their pocket money is a great way to illustrate to them the value of money. It will help them to view money and the things they buy with it in terms of the effort required to earn it.

Pocket money helps you to introduce to your children the concept of saving. It can give them practice in goal setting and planning their purchases. When they decide they want to purchase something large, draw up a savings chart for them showing how much they need to save every week to reach their goal. Mark on their chart every time they put some money towards their goal so they have a visual representation of how their savings are going.

It is important when your children are learning to handle their pocket money that you let them make mistakes. If they blow all their money at once, don't bail them out by giving them more. This is a valuable lesson for life. Once it is gone, it is gone until you can earn some more. Letting them go without, as painful as it is to watch, is the best way to learn the consequences of poor financial choices.


Mobile Telephones

Most teenagers now days consider having a mobile telephone as a necessity. But stories abound of teenagers unwittingly running up huge telephone bills. Giving them a prepaid account helps them to focus on how much they are using and what it is costing. Set limits and time frames and stick to them. If they run out of credit too soon don't be tempted to give them more. The benefit of learning to operate within a budget far outweighs the inconvenience of doing without for a short period.

Parenting can be difficult and challenging. We all try to give our children the best start in life we can. We are preparing them to take their place in a complex and changeable world. Giving your children a solid background in handling money will give them the necessary tools to become independent and self reliant adults.