Building a legacy of giving – the early years
The challenge of raising children to understand the value of a dollar perplexes many a modern parent. There are a myriad of methods parents can use but one of the best ways to teach the value of money can be to show them how get them to give it away.
Introducing philanthropy at a young age helps parents raise more financially literate and compassionate children. Children who learn to give, as well as take, are learning about the opportunity cost of different decisions. Being exposed to a world beyond their peer group is healthy and shows how they can make a difference using their own resources.
This is particularly important in wealthy families where funds are not limited in a meaningful way for children. Learning to give, as well as spend and save, is an important part of realising that each transaction should have has a purpose and be considered. It also helps parents instil the idea that a transaction can be for collective benefit rather than just serving the individual.
The early years
Primary school children are still mastering the art of sharing, let alone giving something away. At this age parents need to start the conversation about the reason for giving and use simple language around what the benefits will be. A child that has just had a birthday can experience giving in the following ways:
– ‘make room’ for new toys by collecting older toys and using the recently discarded wrapping paper to gift these to charities. This can be challenging for people at any age but with the right encouragement this can become a meaningful family tradition for birthdays and Christmas.
– Writing thank you cards – acknowledging and respecting the sacrifice others have made in order to provide the child with a gift. This can include thanking the family for running the party and the inevitable clean up!
– Collecting a gold coin from friends at the party and donating it to a charity of their choice.
Some parents have gone as far as having a ‘no presents’ policy and instead asking their child’s friends to donate funds to a charity in lieu of a gift. These parents make the case that their child has more than sufficient and the party girl or boy should focus on giving to people less fortunate.
It is important to let young children choose their charity to get them engaged with what is going on. This can involve a discussion with family or some time spent on the Ipad looking at good causes (a change from using it to play Angry Birds).
Making it last
Parent who teach children to give have already laid the foundations for building financial literacy. The skills learnt through giving also expand their cognitive skills as they learn to apply reasoning to their decisions. But most importantly, the values a child adopts at this age become central to their development as a person in later years. The next edition of The Financial Woman will look at how to maintain giving among Teenagers and Gen Y and the added benefits for each age group.