Want your child to be better with money? Teach them to spend, not to save.

As a finance coach, I’m always working with my clients on their money mindset and financial goals. As my clients start realising what they’d been missing all these years with regards to money management and investing, I often get asked these questions by my clients who are also parents:

“How do I teach my children about money? I don’t want them to be entitled.”

“How can I get my children to start investing early?”

“How do I get my children to save more and plan ahead?”

As parents, you always want the best for your children. You wish you knew all about financial literacy when you were young, but unfortunately, your parents never taught you about money, and neither did the schools. 

Now, you want your kids to have a headstart to managing their personal finances well because you now know the compounding effects of time.

However, since your financial literacy as a child was a blank page, you have no idea where to start.

Everyone you know talks about the importance of saving so you tried to implement a savings jar and other incentives for your child to save.

Whenever you try to tell your child to do something or not do something related to money, the emotions of frustration, uncertainty and dread set in. 

“Am I teaching the right thing to my child?” you may wonder. 

I hear you parents!  

As a finance coach, I work with my clients on reframing or shifting their mindsets to change their limiting money beliefs. These are often beliefs they had inherited from their parents or from their childhood experiences. 

“You repeat what you don’t repair!” 

That’s why I wrote my digital course Money Savvy Parents, a step-by-step guide to help parents understand more about themselves and their family dynamics. It includes a framework that you can use to teach each of your unique children about money. 

It’s about going back to your money beliefs and repairing the limiting beliefs that don’t work for you. It’s about understanding your child’s spending personality and money beliefs too. 

In my digital course Money Savvy Parents, one of the important concepts that I advocate is:

“Teach your child to SPEND, not to SAVE - Dinah Poehlmann”

“What?! Teach my child to spend? You must be crazy, Dinah!”

Let me explain. 

Think about it. Saving is such a passive action when taught to a child. If your child gets some money and you insist on your child saving, it literally means taking the money and putting it into a jar or box, or anywhere deemed safe. 

That’s it…task done. So, your young child might be thinking “Ok, so that’s what money is all about. All I need to do is to keep the money safe and my parents are happy…easy peasy!”. With this type of mindset, a little Money Hoarder is created.   

But, how does this act of storing money away actually TEACH your child about money management? How would it benefit the child when he needs to be independent and take care of his finances?

Many of my (adult) clients are still facing this issue. Since childhood, they had been taught to save but never to make decisions. Hence, they couldn’t get beyond saving to actually investing their money. That was, until they decided to shift their money mindset during our coaching process. 

Now, on the other hand, spending is an active decision. When you want to spend money, you need to make real decisions:

“What should I buy?”

“Which should I buy?”

“When should I buy?”

“Where should I buy?”

That’s a gamechanger – when you actively train your child to make money decisions through spending. 

When your child is regularly allowed to make money decisions, some small mistakes are bound to take place. In fact, the best time to make money mistakes is when the child is young. Little, harmless money mistakes are worthwhile in passing on valuable learnings to the child. 

If your child overspends one day, he will soon learn that he needs to go without something the next day. 

If your child purchases something that he doesn’t like as much as he thought, he’ll soon learn that he has wasted his precious allowance and perhaps will be more careful the next round. 

Another concept that I teach in Money Savvy Parents is using an allowance as an effective tool. An allowance can only be effective if it is given consistently and the child is able to spend it as they choose. 

If you are giving an allowance to the child and dictating every cent that the child is spending, you might as well not give the allowance and just buy the child what you think he needs. 

Remember your job as a parent is to guide your child through their money decisions and allow them to build up confidence around money and develop a healthy relationship with money. 

If you want to know the step-by-step approach on how to use an allowance as an effective tool to teach your child about money, sign up for my Money Savvy Parents Digital Course. Click here to get more details.