Three things I’ll tell my daughter about money
1. One of the first things I’ll teach her is why there are sweets by the till in supermarkets.
The reason is simple, a company’s job is to make money, so it puts the sweeties there to try and tempt us to buy one more thing, so it can make a little more cash.
It’s our job to try not to be tempted, and make the right decisions for ourselves. This doesn’t mean companies are wrong, just that they’re there to sell to us, not to look after us.
2. If you spend money once, you can’t spend it again.
In other words, a lesson in opportunity cost. I’m a great believer in letting kids earn pocket money, to teach a work ethic and the real value of cash.
By giving them their own cash, you can start to explain that there is a choice; either buy something small this week, or buy nothing, wait a few weeks for the cash to build up, and have the big toy you really want. Learning delayed gratification is crucial.
3. Sometimes there are no right answers.
This is for when she’s quite a lot older. Learning about uncertainty is a crucial lesson in finance, as in other elements of life. Whether fixing your mortgage will be cheapest, whether the cost of tuition fees be worth it, what’ll happen to house prices or the stock market – without a crystal ball you can’t know for certain.
Understanding that there are many shades of grey, and learning to weigh up upsides and downsides in any decision, without panicking, is a skill that keeps on giving (I only wish I had it).