The concept of ‘monkey see, monkey do’ is alive and well in Aussie families, and that includes when it comes to our parents’ habits with money. When parents behave badly with money, guess what their children do?

As a parent, your role modelling is one of the most powerful indicators of how well your children will survive financially. Whether your children are two or 20 you can set them a better example.

Don’t see money and spend it

Do you see money and spend it? Is hire purchase your friend? As a parent it’s your duty to educate your children about the difference between needs and wants. If you buy what you want when you want and call it a need, your kids are probably going to turn out poor. Show them how it’s built into the budget.

Build a career

Not working can send the wrong message to your child. Even if you can live on benefit, your spouse’s income, or investments, you might want to consider the effect this has on your child and their earning potential. A career is essential for building wealth. Yes, it’s great to have a parent at home during the younger years, but you don’t want your daughters in particular thinking that a man is their financial plan? That really can end in tears. Volunteer roles are valuable. But paid work sends a clear message to the next generation.

Avoid big barneys

When mum and dad fight over money it sends all sorts of awful messages to children. They may see money as stressful. Or that money is a source of power. Sit down and work out how to move forward united. That may mean giving each other monthly ‘his and hers’ money built into the budget.

Turn them into adults

One of your jobs as a parent is to turn your children into fully functioning adults. Yet we breed ‘kidults’ who don’t fly the nest. Or they turn into kangaroo kids that keep bouncing back home.

Start young

Give them regular pocket money from a young age in return for some chores. But if they misuse that money don’t replace it not matter how much your heart is breaking. Advise teens on the art of budgeting and encourage them to pay their student loan back as fast as they can. Beware of funding every cent of university, and think twice about going guarantor or providing the deposit for their first home. St.George’s website has more advice on starting kids young.

Don’t buy top of the range

We don’t want our children to miss out, but buying top-of-the-range everything sends bad messages. Make them work part time and contribute to their toys and gadgets.

Talk more

Life is busy, but if you take the time to discuss money over dinner, in the car, at the beach or whatever suits your lifestyle, you will help your children think before spending or borrowing. Each family has its own financial strategy. When we took our big overseas trip as a family the topic of our holiday budget came up more than once. For example, we ate most meals in our apartment in the evenings, and bought lunches in the market during the day. We also talked about how our relatively frugal lifestyle at home meant we could pay for the holiday from savings, which cost less than doing it on credit.

Watch your language

So you’re going to ‘invest’ in a new car, a new kitchen, or an extension to the house. Beware of using language that makes children think this is good spending. The reality is you’re buying the car because you want a better one, not need it. You didn’t choose the kitchen or bathroom for their return on investment. And you didn’t do a business plan or spreadsheet that proved it increased the capital value. You chose the design of your dreams – or the nearest to it you could afford.

So let’s all be good parents and think before we talk, act, borrow and spend. If we want our children to be better financial citizens we need to buck up our ideas ourselves. That way they won’t be hounding you for money for the rest of your life. Hopefully!

The post Parents behaving badly: How parents’ money habits can rub off on the next generation appeared first on Credit Simple.

There’s no magic in becoming financially fit. But Credit Simple’s Four Pillars of Wealth approach can help you get there. Going from debt to building wealth is easier than you might think. We guarantee there are people around you earning no more than you do who are well on their way to wealth. Here’s how to become one of them:

Pillar one: spend less

Do you know your needs from your wants? It’s only you who suffers if you’re not honest with yourself. Start by kicking the porkies we all tell ourselves into touch. Do you find yourself saying: “I need it” when in fact you ‘want’ it. You don’t need it.

The first step to escaping the ‘needs’ versus ‘wants’ trap is to keep diary for a month and list every last cent you spend. Expect to be shocked when you analyse this diary. Most of us have no idea how much moolah we fritter away. While you’re in honest mode take a long hard look at your supermarket receipts. You’ll probably find that half of what’s in your trolley is a want, not a need.

Pillar two: earn more

By spending less you’re becoming richer. You can supercharge this by earning more.

Never say never. There are many ways to earn more. You can ask for a pay rise, get a promotion, find a new job, or moonlight. Make sure that you have a written career plan and you’re ticking off milestones to the next step up the rung that you can grow into.

If there really honestly isn’t any extra to be made at work, look for ways to make money on the side. That could be anything from selling stuff online to babysitting or starting a part-time business from home.

When you get that extra money don’t let spending creep swallow your extra earnings. Make sure you bank a good chunk of your pay rise to benefit none other than your future self.

Pillar three: pay off debt

Carrying a balance is normal right? Well, no, not really …

But paying off the debt requires a plan. That’s probably to pay off those with the highest interest first. Some people, however, choose to clear the debts that give them biggest psychological boost to dispose of. Celebrate when you hit milestones in your journey to becoming debt free.

Shocking as it may sound, some people still wait until they have the money to buy what they want. If you can retrain your brain and think like this your debt will disappear a whole lot faster.

Pillar four: save and invest

Once you’ve freed up some spare cash and paid off your debt it time to start saving.

Don’t just leave your money in the bank. Good investments such as retirement funds, property, shares/managed funds, and bonds grow faster than inflation.

Providing you’re sensible, spread your risks and hold your investments for the long term, your money will buy far more for you in retirement than it could now.

Getting started:

At Credit Simple we know you can get ahead. But don’t chew off too much at once. Work your way through the four pillars one step at a time. Habits take time to change, but you can do it.

The post The four pillars of wealth: Your way to a richer future appeared first on Credit Simple.