One Day You’ll Thank Me: Understanding money: The important life lesson kids are missing out on

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Many Kiwi parents will feel more the pinch of the rising interest rate and the Christmas shopping season. But how many of us have discussed these challenges and how we’re managing our money with our kids?

Balancing the household books for most people is something that should be discussed only with adults. Scott Pape, father to four and author of a sell-out book, is a different story. The Barefoot InvestorUnderstanding money is one of our most important skills that we can teach our kids.

“Money is the one thing that every kid is going to be tested on, every day of their lives,” says Pape. And to that point he’s written a new book about money, specifically for children: Barefoot Kids: Your Epic Money Adventure.

On this week’s episode of One Day You’ll Thank Me, Pape shares his tips for raising financially literate kids and, in doing so, avoiding them falling into the dreaded category of “spoilt brat”.

He says that money is often seen as maths. Pape argues that money should be viewed as a language.

” … if you don’t speak that language at school, if you don’t speak that language at home, it’s very tough. We, as a society think, ‘oh, okay, by the time you’re 18 you magically start talking, you know, understanding this language’. But that’s not the case.”

Most children’s first exposure to managing money is with their pocket money.

Pape says it provides important lessons that help ensure kids aren’t being raised expecting everything will just be handed to them.

Firstly, he says it’s key to instill the notion that money comes from working.

In Pape’s household, that means chores in addition to normal family jobs that don’t count as money makers.

“My kids do not get paid to make their bed, to take their smelly socks and jocks into the laundry basket or to do the dishes or set the table, in the same way that I don’t get paid to put very average spaghetti bolognese on the kitchen table.

“We are a family. Not everything is a transaction,” he says.

There’s also a key lesson to be learned from the way your child spends their pocket money, says Pape, who’s set up three jars for his children to deposit their hard-earned coins into.

“Every jar gets at least some money when payday comes. One of those jars can be used for giving. The giving jar helps you to form a relationship with your children and encourages them to give.

“Kids are narcissistic … it’s all about them when they’re little. But what you want to try and do every time they get paid is just to shave off a little bit of money and say, ‘What can we do for somebody else?’ Whether it be buying Gran some flowers … helping out a food bank in your local area, or donating.

“If you do that week in, week out with your kids, as they’re in primary school, they’re going to start to understand the power of giving. We all know that the most happy people are those who give. So, for me, it’s about those behaviours we want to build in kids.”

Pape says if parents can build up the notions that “we work hard in our family and we give money to the community around us, those are the beliefs that mean that you’re not going to bring up spoilt brats – but hopefully they’re not going be living with you when they’re in their 40s either.”