With COVID-19 rocking economies across the globe, many families are feeling the financial impact. Whether families are having to deal with unemployment or simply having to reduce household expenses, the financial impact of COVID-19 has become the elephant in the room.
Research shows that most children’s financial habits are set by the age of seven. So, leading by example and teaching your children how to navigate difficult financial situations like COVID-19 could have long-term benefits.
We sat down with Yael Israeli, Co-Founder, and CFO at Mozper, a debit card designed to help parents and children in Latin America create financial conversations and learn important money management skills, to discuss how parents can teach their children about personal finance amidst the current chaos and market uncertainty.
1) Creating Conversations About Money
In most households, especially in Latin and Central America, kids don’t know how much parents earn or other financial factors impacting their daily lives. When times are hard, households naturally constrict spending and look to make cost-savings which can make children feel stressed and like the situation is outside their control.
While kids shouldn’t feel like it’s their responsibility to manage family finances, it is essential for them to feel like an active member of the financial unit of the family and understand money stresses. Parents need to create conversations that keep kids informed without adding to their worries.
2) Age Appropriate Conversations About the Financial Impact of COVID-19
Yael urged parents to start these conversations using age-appropriate advice. After all, it’s better to open the door early and create transparency that avoids the elephant in the room.
While COVID-19 certainly creates financial hardships, it also creates an opportunity to talk to children about money and involve them in the decision making process. It’s essential to explain that this is a global situation, impacting everyone and hasn’t been caused by anyone in the household.
Ask your children how they can contribute to the household finances? Is there anything you can do as a family to make a difference to the current situation?
Yael stressed that parents need to control this narrative and make sure their children fully understand that the adults are responsible for paying the bills and providing financially for the family.
3) What Happens When Parents Don’t Have the Answer?
Given the unpredictability of our current times, it’s not surprising that many parents feel they don’t have the answers and won’t be able to answer their children’s questions. But not talking about the situation creates tension in the household.
Yael explains that parents need to strike a balance between awareness, information and not creating anxiety in their children.
Older kids might have some really good questions and rather than giving them the cold shoulder or brushing off the subject, set about trying to find the answer together. Yael encourages parents to sit down and Google their children’s questions and make finding the answer a collaborative, problem-solving exercise.
4) Three Ways Parents Can Raise Financially Responsible Adults, Despite the Current Situation
- Lead by Example
Sometimes, parents feel like they haven’t done well enough to teach children or feel embarrassed by the current situation like they’re the wrong person to teach their children about money management. Whatever your situation, Yael encourages everyone to overcome this hesitation so that you can help your child have a better relationship with money.
2. Break the Taboo
The current situation opens the door to talk about money and family budgets without making it seem like financial difficulties are anybody’s fault. Overcoming the fear of talking about money will make children feel better and more in control of the situation.
3. Create Consistent Conversations
While COVID-19 will eventually end, conversations around money should not. To truly encourage healthy financial habits, parents need to speak about money on a regular, consistent basis. These conversations should be ongoing with constant discussion and reevaluation.
5) How Mozper Helps Families Creates Conversations About Money Management
Children need a way to put abstract concepts into practice and learn through mistakes; that’s where Mozper comes in.
Mozper’s digital app helps parents set boundaries on spending limits and even where children can spend their weekly allowance without risking unexpected fees or overspending. Children receive a debit card that they can use in real-life situations and gain vital hands-on experience.
Parents have control over how much independence a child has and can slowly relax the guidelines until children have complete financial freedom. Supporting children through different life milestones and building their confidence in a safe environment provides a framework for teaching good financial habits that’ll last a lifetime.
Mozper’s online community provides tons of useful advice to help parents navigate challenging conversations and start their children’s financial education.
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Written by Kathryn Strachan, Everly Journalist & Managing Director at Copy House. When Kathryn’s not creating articles for Everly, she runs Edinburgh-based content marketing agency Copy House. Copy House specialises in helping FinTech founders bring their insights to life with SEO optimised websites and thought-leadership content.