How to help your kids financially without spending money on them

I still remember going with my dad to buy a “new” car in primary school. Until then, we had this big clunky Volvo with extra seats in the boot. I loved sitting in the back, waving to the bemused drivers behind us. But it was an old car and, eventually, it was time to say goodbye.

When the “new” car arrived, it was exciting. At the time, I didn’t know that a second-hand white Toyota Corolla wasn’t exactly a brag-worthy purchase.

The author’s parents lived within their means and cared little for status symbols.Credit: Simon Letch

We kept this car for a good decade or more. Even though I saw other families buying newer fancier cars, it never bothered me. Our car worked well. Did the job. Why would we change?

Looking back, I notice my parents made many such uncommon choices. We rarely went on overseas vacations. We visited the library more than the cinema or Blockbusters. Eating at restaurants was a rare occurrence.

My parents lived within their means and cared little for status symbols. While their lifestyle was simple, it also bought a freedom which is hard to put a price tag on.

Freedom from financial stress.

“Good” parents do anything for their kids right? Isn’t that what you’re supposed to do? Well, actually, no.

Now, having talked to hundreds of people about their finances, I have come to appreciate how uncommon and also immensely valuable my parents’ decision was. This is something that I see parents, in particular, struggling with.

Parents want to give their kids “the best”, and will often go to great lengths to afford it. This could look like overspending on a bigger house than you can actually afford. Or sacrificing your retirement to afford private school. Or going into debt to afford tuition.

On a smaller scale, it could look like trying to “keep up” with others so your kid doesn’t feel left behind. Over the years, the fancy vacations and big birthdays start to add up.

But “good” parents do anything for their kids right? Isn’t that what you’re supposed to do? Well, actually, no.

Now, I’ll admit. I’m not a parent. But I have supported many parents in improving their financial lives, which almost inevitably ends up also improving their family life.

Today I’m sharing three things which will make a bigger difference to your children long-term, than spending money on them:

1. Prioritise your own financial retirement. This is one parents often struggle with because it may feel selfish to put money aside for something you need decades from now, when there’s something you could buy your child today.

But one day, your child will become an adult. They’ll have their own dreams they want to make a reality. Maybe they’ll want to have their own kids, or maybe they’ll want to start a business or travel the world.

They’ll also have their own unique financial challenges. Maybe they’ll have to face a serious recession, or redundancy. Maybe they’ll go through a divorce or meet with a health crisis.

So, years from now, will your adult-child care about the fancy birthdays? Or will they value the freedom to build their life, without worrying about financially supporting your retirement?

2. Prioritise a financially secure household. It’s naive to think children aren’t impacted by financial stress. Financial stress is an invisible culture that lives in the home.

It’s the small comments that are made: “That’s so expensive.” “We can’t afford that.”

It’s the silent fights parents have. It’s the unspoken anxiety during shopping trips, and the crestfallen face at the request for new shoes or school supplies.

It’s the lifestyle choices. The parents who work late and through the holidays. The hurried, stressed school drop-offs and pickups. You don’t have to say it. It’s picked up, the way that kids pick up mannerisms. Unintentionally.

So, look at what you’re spending money on and ask yourself: is it worth the financial stress? Not just to yourself, but to your children and family as a whole?

How would your life, and the lives of everyone in your family, look different if you chose to prioritise creating a financially secure and stress-free home?

3. Prioritise teaching financial responsibility. In a desire to secure their children’s financial futures, many parents want to gift their children wealth. It could be in the form of cash, a property, or an investment portfolio. They want to help their child get a head start in life.

It’s natural to want your children to benefit from your success. But so many parents forget that the real key to their success wasn’t getting the money, but rather the process of learning the skills to acquire and keep it.

Without those skills, gifted money is likely to be poorly maximised at best, and wasted at worst. So, if you really want to set your child up for success, role model and teach them the work ethic and skills required to create success for themselves.

Paridhi Jain is the founder of SkilledSmart, which helps adults learn to manage, save and invest their money through financial education courses and classes.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

For expert tips on how to save, invest and make the most of your money, delivered to your inbox every Sunday, sign up for our Real Money newsletter here.