Most parents strive to help their children grow into well-rounded, happy, financially stable adults. But how much do you subconsciously affect your children’s money habits in adulthood through your parenting now?
Many aspects of a person’s character may be shaped by upbringing, including values, abilities, belief systems, even their personality itself. According to the Journal of Consumer Psychology, the way we parent may contribute to our children’s relationship with money in later life. It can especially impact their behaviour as consumers.
The study highlighted four key parenting styles:
- The authoritative style
Parents that fit into this category are both loving and affectionate. They communicate clearly and effectively and encourage their children to express themselves. They set rules and give their children certain tasks, while allowing autonomy.
- The authoritarian style
Parents that fall into this category micromanage by setting many rules, limitations, and tasks. They do not allow much freedom, nor are they very forthcoming in terms of affection.
- The neglecting style
As the name suggests, these parents are generally mentally and physically absent from their children’s lives. They offer little guidance and advice to their children.
- The indulgent style
These parents are loving and affectionate. They give their children rights and expectations without expecting anything in return. They are lenient and non-punitive.
What is the best parenting style to nurture financially stable adults?
If we want our children to grow up to make better consumer choices, this expert study claims that the authoritative style is preferable.
In fact, there are three ways we can help our children become successful, financially stable consumers:
- Clearly and effectively communicate what you want and expect from your child, setting clear boundaries
- Show your child affection and allow their voice to be heard
- Allow your child the autonomy of making their own choices
Five tips for raising children to make healthy consumer choices
These days children are exposed to marketing messages everywhere. They get them from traditional forums such as billboards and TV ads, but also from their social-media ‘influencers’ and newsfeeds. Parents can help children to filter out these messages and grow up to be smart, responsible consumers. There are a few simple ways to do this:
1. Limit their screen time
Limiting screen time has many positive effects. And reducing your child’s exposure to marketing is not the least of them.
2. Monitor what your children are looking at
Watch TV with your child, check the websites they visit and any other things they may look at regularly. This will give you a good idea of the messages they are picking up on.
3. Talk about negative messages
We can’t protect our children from every aspect of the modern world, and that includes the consumer society they live in. The goal is to help them understand the marketing intent behind the fake images and subliminal promises all around them.
When you see negative or misleading messages, speak to your child about why they are negative and could be harmful. As a result, your child will learn to question dubious marketing content, and should become a smarter consumer in the longer term.
4. Model the perfect consumer behaviour
Children learn from what we do far more than what we say. This means you need to be the model consumer in front of your child. Show them how you budget, live within your means and save up for the bigger purchases you need.
Take your child shopping with you. No matter whether you’re buying furniture, clothes or just the weekly groceries, this is all useful experience. Demonstrate to your child how to:
- shop within a budget
- compare prices and value
- consider factors like healthiness or environmental impact
5. Teach them how to handle money
Spending someone else’s money is easy. Letting your child earn and manage their own money can help them become better consumers. It will motivate them to avoid waste and put their cash to better use.
You should discuss your expectations of how you want them to manage their pocket money. Discuss what their pocket money can be spent on. If they want to save up for a new game or a new bike, for example, advise them how to do so. This will teach them about delayed gratification. You may suggest they make a small regular charitable donation to a cause they are passionate about. Once all these decisions are made, you can help them devise a budget for their pocket money.
Without a doubt, there will come a month where your child runs out of money before pocket-money day. Try not to rescue them every time, as they need to learn about spending responsibly. Far better for them to learn this lesson while they’re living in the family home, with all their necessities covered.
We discuss how to teach children of different ages about money in this blog: ‘A pocket guide to children and money - how to teach your child the value of money’.
At Capital we believe that teaching the next generation to be smart and responsible consumers is vital. As parents, you are the main role models in your child’s life. They’ll learn how to consume and manage money in various ways, no doubt, but most of all, they’ll learn from you.