Make 2013 the year for educating your children financially

Vivi Freidgut
CREATING a New Year’s resolution is as much a tradition at this time of year as Auld Lang Syne or fireworks. Whether done in jest, or with serious commitment, setting resolutions can inspire us to be and do better in the year ahead. Unfortunately, waning willpower and seemingly insurmountable ambitions will likely conspire against our best intentions. According to a University of Hertfordshire study, 78 per cent will drop their resolution by Valentine’s Day.

But success in business – as with resolutions – relies on considered objectives and strategic execution. It’s about setting small, specific and achievable goals, rather than holding lofty ambitions. And January is the perfect chance to plan for the future, by examining the past and taking stock of the present. 2012 was dominated by good sports, bad financials and questionable behaviour. 2013 stretches before us filled with promise, opportunity and potential.

Getting control over your personal finances is an aspiration for many. Taking control, however, is tricky – stumbling blocks exist within and without. So just as losing weight involves the whole family making slight adjustments, saving money is more effective if the family work together. Make it a family resolution.

Being money smarter is not intuitive and the school of life is an expensive way to learn – so it’s important to get your kids involved now. Saving a penny here and a few pounds there is welcome in austere times, with a seemingly never ending haemorrhaging of money. But becoming financially confident involves developing good habits over time as well as thrift.

We speak a lot about formalising financial education, but we seldom discuss the role parents can play in creating a money smarter Britain. Financial capability is about attitude and habits, not maths, and attitudes are first formed in the home. So parents can, and must, be partners in the process.

Parents should consider setting tasks so their kids earn their pocket money, rather than relying on handouts. By paying a bonus for a job done especially well, and deducting from a job done poorly, we can ingrain an early work ethic and aspiration.

Also consider taking kids shopping. By exposing kids to the reality of a grocery shop, they can better understand the value of money and how expensive it is to keep a household. This can prompt conversations about the price differential of branded goods, the fact that not all deals are genuine bargains, and that waste is costly– to the tune of £600 each household per year. Discouraging takeaways and ready-meals can also promote a greater understanding of value and also nutrition.

Finally, set a family saving goal and encourage the kids to think of creative ways to achieve the target by the end of the year. Maybe match any saving they identify, and emphasise the need for delayed gratification.

By understanding that decisions made today impact the future – for better or worse – our children will gain the most important lesson of all.

Vivi Friedgut is author of Money Smarter: A Family guide and director of Blackbullion, an independent financial education firm.