A new start to life

Few things are as rewarding as a new addition to the family. Our children are often the most meaningful connections we have in life, and just as we shape them, they shape us too in lasting and profound ways.

Every parent wants the best for their children, and perhaps one of the most significant advantages you can give your child is teaching them the value of money early on – how to manage it, grow it, and spend it mindfully.

Teaching money management skills is one of the best ways to help them navigate a complex financial world.

Surprisingly, getting this right is often harder in more affluent families. By some estimates, 70% of wealthy families lose their wealth by the second generation and 90% by the third. As each generation becomes further removed from those who originally created wealth, valuable insights and lessons sometimes get lost in translation.

Grandchildren may not see what’s needed to build and maintain their lifestyle, and when access to money is easy, the most critical financial conversations don’t always happen.

Shaping our behaviour and relationship with money

Whatever your child’s age, you can instill good financial behaviours. These lessons start in small ways, like whether to spend pocket money all at once, or to save up for something more meaningful over a longer period.

Pocket money teaches independence while also providing an excellent foundation for developing good money habits and money discipline early on. Research shows that having these discussions early on and reinforcing them through practice, pays off in the long run.

The Stanford Marshmallow Test, conducted in the 1970s, famously demonstrated this principle. In the test, children could choose one small, immediate reward (a marshmallow) or wait 15 minutes for two small rewards.

Follow-up studies revealed that children who waited for the better reward had improved self-control, which resulted in more success later in life. This is a key example of the importance of being disciplined with money and making thoughtful financial decisions.

In a world of over-consumption and abundance, where instant gratification is the norm, we need to gently help our children get off the hedonic treadmill so they learn that the happiness they get from buying “things” will fade over time.

In her book Dopamine: Finding balance in the age of indulgence, Dr Anna Lembke says that we’re too easily ruled by the pursuit of dopamine today in the form of sugar, social media, entertainment and online shopping, just to feel good about ourselves.

Open conversations with your children that guide them towards making healthy financial decisions will set them up for long-term success. At its core, we must help our children learn how to balance the need to generate, preserve and enjoy wealth over time.

Teaching them how to be financially disciplined will serve them well in all aspects of their lives.

But success in life isn't just measured in financial terms. While a good education is important, some of your child's most formative experiences aren't shaped by a standardised school curriculum, but by how well they absorb values like integrity and kindness, how quickly they learn adaptive skills like resilience and developing a growth mindset, and how effectively they can think on their feet when faced with challenges.

The legacy we leave our children extends beyond finances; it's also about the values we instill in them. By equipping them with the right skills and fostering open conversations, we can prepare our children for successful lives that benefit future generations.

This process starts with prioritising financial discipline, teaching money management skills, and understanding the benefits of financial literacy for a brighter and more secure future.