My top tip to teach kids about money – make it hurt

When it comes to managing money, there are two main types of people: those for whom it flows swiftly out of their hands, and those who are strategic. Think about it.

Teaching and shaping your kids into adults who are the latter – who deploy money strategically – will change their lives. It will also equip them to be able to, one day, afford to move out … but more on that in a bit.

Well, I believe the key is creating pain in the game. And closely associated is enjoying the greater, gratifying ‘wins’.

When you let money flow virtually straight through your hands, there is no pain. There is also no decent pay-off – there’s never anything left for anything bigger or better.

When you are instead strategic about the allocation of your always-finite financial resources, there is interim pain, but ultimate pay-off. For your child, they get to experience – under their own financial steam – a fabulous schoolies trip, their first car, a gap year overseas, progress towards a property deposit. But I will get back to that last one, too.

Of course, the underpinning concept of ‘pain in the game’ is delaying gratification. And that ability – which can be taught if it is not hard-wired in your progeny (or you!) – is promotive of success in many aspects of life: health and fitness, study for a career, success in that career. In fact, in targeting any goal, financial or other.

It sounds harsh, but it’s all a tremendous exercise in assiduous money allocation – and a little pain for a lot of pay-off.

Someone for whom things have always come easy is never going to have the mindset to put themselves through a bit of discomfort, let alone the proper, self-imposed hard stuff. So, what does financial pain in the game look like in practice for your kids?

Firstly, a non-negotiable template from the get-go for all money that enters their hands … to prevent it from ever just flowing through their fingertips (remember, they don’t have our expenses just yet).