What is the most common thing a Polish family doesn't talk about? Money!
There is little substantive conversation on financial topics between adults, and when most of our children ask for or ask to "buy something" we usually respond with "I don't have any money" (regardless of whether it's true or not).
In many places, the belief still prevails that money is not something to be talked about in the presence of children… but where are these children supposed to learn about money and financial decisions, because schools usually do not address the subject either. Young people enter the adult world completely unprepared for real life and making their own financial decisions.
… and yet we all know that “what a shell absorbs in youth, the same it stinks in old age”!
Today I have five simple rules for you that will work great with small and older children. Additionally, implementing them does not mean that you have to give your child pocket money or any extra money. You can use what you already spend as a family.
It will be about teaching decision-making and responsibility, building healthy financial habits for the youngest, saving without effort and sacrifice, and even an offer of an extra bonus of up to PLN 400 up for grabs ... and all set in the real world and our everyday parenting.
So how about this? Let's start!
I am deliberately not writing pocket money, because that is a topic for a completely different conversation – do you want to raise your child to be a “salaried employee” who collects a salary every month, or a more enterprising type who has to put in the effort to earn a cash injection, which may be quite irregular?
So what is this budget for a child? You definitely have some amount in your household budget that you spend on toys for your child, or sweets, or joint, family activities in the city (cinema, theater, amusement parks). Set what that amount is and let your child manage it.
For us, the “weekly” worked well , joint consultations on what we would do together on the weekend and whether we needed money for it. Determining what sweets we wanted to eat and how much money we had for them and how much we would spend on toys. Junior, on the other hand, managed these mini budgets to spend. He made family decisions, taking into account our and his preferences.
The biggest topic with children is always toys. Here, even if there were more visits to the paper shop (where there are also toys) during the week, we took photos. There is one day for shopping - Saturday. Until Saturday, the Young One analyzes, thinks through and decides what he will ultimately choose from the photos and the available budget. The photos turned out to be an excellent exercise for postponing the purchase , less impulsive decisions and more thoughtful spending.
Older children may already have several categories of the family budget in their management … even choosing and paying for part of the vacation, their clothes or extracurricular activities. When they go to school and can count, an additional advantage is that they start to be aware of “how much it all costs”. They add up the total and categories on a monthly or yearly scale (but more on that in a moment).
As a rule, money is abstract for us (even adults) (I wrote more about it in this article)… let alone for children!
The younger the child, who can't count well yet - the harder it is to find context and a proper point of reference... any notion of "how much does it actually cost?" has no basis in reality. So find a conversion rate that the child understands.
When my Son was 3-4 years old, there was a craze for rubber mini Super Zings figures, which were bought in sachets. One sachet cost about 5 złoty. A sachet of Super Zings became our currency. Every time he chose a toy or something to buy, or we talked about how much something cost - I calculated how many sachets of Super Zings he could have for it.
An additional advantage of this technique is that the child learns to consider alternatives for spending this particular amount of money. It breaks the pattern of mental accounting. They quickly start asking themselves: "what else can I get for this amount of money?" ... and this is a very healthy habit that allows you to stop for a moment and think whether a given expense is the best way to use this amount of money.
In the case of older children who already have their first experiences of working for a living – teach them to calculate the amount they want to spend in the time it would take them to earn that money. Let them also answer the question – is a given thing valuable enough to work X hours for it. (Yes, it is always better to calculate it in hours, not days – because there will be more of them, so the brain will assign a higher value to the effort).
Even small children very often start receiving money for various occasions. From the very beginning, introduce a strict rule that a specific % of this amount - they should save, and only then spend the rest.
Similarly, if your child is already earning their own money, only let them spend it on their own if they have saved at least 25% of that amount and keep accurate records of what they spent the rest on.
Divide this saved money into two piggy banks. Saving for the sake of saving and saving for a specific purpose.
In this way, you will teach your child that savings are worth having in general and that you do not necessarily have to save with a specific goal in mind. If you invest these savings wisely in the long term, using the benefits of compound interest, your child has a chance to accumulate quite a reasonable amount of wealth during their lifetime.
This is the second rule that must be strictly enforced from children. All money spent from the budget managed by the child, from pocket money, money saved for various occasions or earned independently, all these expenditure amounts must be recorded and counted. You can introduce several categories (but not too many! 3 to 5 will be just right) and count the total on a monthly or annual scale.
Compare, analyze and talk about what turned out to be a good purchase – it still gives pleasure and joy, was a good experience or experience, and what did not. Draw conclusions for the future from unsuccessful purchases.
Help your child create their own rules and lists (be sure to write them down), and let them contribute to those in the shared household budget.
When it comes to saving and money, the rule is simple – the more we automatically save, analyze and record our expenses, the more money we have in our account.
Where possible – teach your child to build a system that supports their good savings habits. Account system – separating expenses from savings is the first step and an extremely important habit.
A good banking app or another one that allows you to list and analyze your expenses without much effort – those are two.
Automating investments and savings, minimizing fees, and reaping extra bonuses – those are three.
These simple steps – turned into habits through repetition – will transform your child into an adult for whom saving is a natural action, not a hardship or sacrifice.
I am a huge advocate of teaching children as early as possible how to function financially in the real world… i.e. the world of electronic payments, cards, and accounts.
Yes, it's true that when we pay cash, we spend the least... only in recent years the whole world has switched to electronic money. The pandemic has accelerated this process, and young generations are constantly on the Internet, social media, where they are bombarded from every side with messages "buy" and "spend".
Nowadays, children need to learn to control electronic money as soon as possible, so having their own account, card or electronic savings banks is a better preparation for life in the real world than a good old ceramic "piggy bank".
I really like the definition of saving, which is that saving is the gap between your ego and your income. When you start thinking about it that way, you suddenly understand why a lot of people who have really decent incomes save so little.
Saving money is then a daily struggle for them with the instinct that tells them to “show off” to others. Especially in the era of manifesting “Instagram life”, this means marking one’s status through a lavish and luxurious lifestyle. … and don’t get me wrong, I have nothing against luxury, cool gadgets, or great trips and spending money. I like it myself and I don’t live very minimalistically… the question is what happens “behind the scenes” and whether all this glitz is just for show or is it what we have left after saving.
Teaching your own children the habit from a young age: first save, and then spend what you have left after saving, showing that this is a system that works, not a sacrifice – is the most valuable capital for the future that we can give them . Every system, machine, habit, to serve us, must be embedded in the real world, the everyday life in which we live. That is why I highly recommend that children have their own account, cards and electronic piggy banks as soon as possible . They learn to manage electronic money wisely – because this will be the world of their adult decisions.
Want to be on the plus side? See how I can help you!