"I give my children money for financial education, not for doing housework or passing"

Due to lack of time or ignorance, teaching the little ones in the house to handle money well is not a priority for many parents, even though procrastinating financial education ends up having very negative consequences. A situation that Sara Vicent decided to change when she realized that her eldest son had no limits when it came to asking her to buy him stickers. “I set out to help him take responsibility for her money and make sensible decisions,” she explains in the book Don’t Play With Money! (Amat Publishing House).

This is how this philologist and mother of two teenagers (Guillem and Pau, ages 10 and 13) entered the world of finance and began to develop a method to teach children between 3 and 12 years old to maintain a healthy relationship. with money and being able to understand why it is so important to save and not buy everything you want.

– Only 25% of families affirm that they educate their children financially, according to their research. It seems to us fathers and mothers that other aspects are more urgent.

-Yes, and also because they have not given us structured financial education. Perhaps they encouraged us to save and told us that “money is hard to earn”; Our parents did what they could in this regard, but they did not have a plan to educate us financially. That’s why we forget too.

-And the consequences can be serious, as demonstrated in the 2008 crisis, in which many households could not pay their large mortgages and lost their homes.

-Indeed, we saw the real consequences of not having financial education, which are not only economic, but also directly affect health. There are studies that prove this: for example, in June 2022 the OECD revealed that people who do not know how to manage their money are on average 20% more likely to suffer health problems such as migraines, stress, anxiety, heart attacks and ulcers.

-What other collateral damage does financial stress cause?

-It also affects our personal relationships, due to the tension it generates and the situations in which loans are requested from family members, which sometimes becomes a source of conflicts that would not have occurred if we had had financial education. Money management affects all dimensions of life and that is why it is so important to lay good foundations from a young age.

-How did your work in this field begin?

-When day in and day out my oldest son asked me to buy him stickers for a collection. His behavior made me reflect and see that he was not giving him financial education, because the one who regulated and set the limits [in his purchasing decisions] was me. But I wanted him to be able to self-regulate in money management, just as, for example, we teach our children to brush their teeth or dress themselves.

– Each child must have a piggy bank.

-But it is not enough, although it is quite easy if you follow a plan, teaching them four basic financial concepts through a series of graduated tools as they grow, which are income, expenses, savings and conscious money management. This way we will be giving them a fantastic foundation that will make it difficult for them to fall into impulse purchases or the traps of neuromarketing, for example.

-His method mixes neuroscience, pedagogy and psychology to address this issue.

-Yes, because I conceive financial education from educational and not economic bases. Because? Because in this way we help our children develop executive functions, which are skills that take a long time to mature, as they are found in the most modern part of the brain. Skills such as analysis, reflection, inhibition of impulses, postponing rewards… if we work on them, we help them develop comprehensively, so that they are autonomous and can make their own decisions in the best possible way.

– Do you recommend working through certain tools, what are they?

-For example, the pedagogical contract applied to financial education, although it can also be used for other aspects such as the management of mobile phones and screens.

-What does this educational contract consist of?

-It is about reaching an agreement with our children based on our rules and limits. After prior reflection, we will explain to them what [the contract] consists of and we will let them negotiate it taking into account that we are not in a situation of equality with them (…) This contract evolves with age: it will not be the same when they are 6 years old than when they are 10 years old. age at which they are ready to take on more responsibilities.

-What basic rules did you agree with your children regarding money management?

-I told them: “I will give you the payment because it is part of your financial education, that is, you will not be able to spend on all the things you want, but you will have to limit yourself to certain purchasing rules that coincide with my values ??as a mother.” “Afterwards, you will not receive payment for doing housework or for passing or doing homework, because the payment has one objective, which is to educate financially.” Another limit I set: “To receive it, you will have to follow and have updated income and expense control so that you manage your money consciously.”

-One more limit.

-“From the moment the desire to buy something arises, you will not consummate it; you will distance yourself.” This is very important to teach them to postpone reward and tolerate frustration. To do this, we will introduce some purchasing rules that will be written and, after a week, we will analyze them and if [the boy or girl] considers that he still wants to do it and has money, he will do it.

-Anything else to keep in mind?

-An idea that is also important to convey is that money is used to save, but also to live well and enjoy, so a balance must be found. But it is true that many times, and it usually happens to children because they do not have a sufficiently developed prefrontal cortex, a desire arises and they want to buy what they like immediately.

-Any trick to deal with those passing whims?

– What we have to do is take the wish list, write down the date of each one, how much it costs and let it rest. And after a week you will have to analyze whether what you have seen is still something you really want or not. In the process we can help you by asking questions such as: “Do you really need it or has the desire arisen now because you like it a lot? How much money does it cost and how much do you have? What impact will the purchase price have on your finances?”

– How much money should you pay a child?

– This question is very difficult to answer because each family’s circumstance is different; A figure may seem like a lot to one and very little to another. To set an amount, parents must reflect on their economic situation, their values ??and financial objectives, based on the fact that the payment is an instrument of financial education that should increase with age.

-And once the amount has been set, how should we proceed?

– The money you give your child has to be used for two fundamental things: one part – ideally 10% – should be allocated to the emergency cushion, and the other part would be freely available. So, based on the fact that families assume the cost of education, upbringing, food, among others, you should consider what your child can spend the money on: can he do it on leisure and on things that are not strictly necessary? Let him bear those expenses and experience the consequences.

– When do children have to be aware that they cannot waste resources irrationally?

– From a very young age, because using resources well means turning off the lights when we are at home, brushing our teeth with the tap turned off and, when they accompany us to the supermarket, teaching them to compare and not buy unnecessary things (…) It is very It is important to verbalize and talk with them about our economic situation and objectives; Take advantage of these moments of everyday life to help them reflect.

– If we have done our homework well on this topic, what can we expect from our children as adults, who end up being rich and prosperous?

– If we have given them this base of knowledge, they will surely not make decisions that go against their long-term financial objectives. For example, they will clearly see that a mortgage exceeds reasonable limits with the income they have. But it is not necessary for them to get rich; What we want is for them to make the best decisions, to not suffer economic hardships or any health problems related to a lack of financial education, to be the protagonists of their lives.