No wonder we have few investors in Brazil. Financial education is still a rare topic in families and schools – something that, fortunately, has improved in recent years. Be part of this change! View financial education as an essential learning that your child should take into adulthood.
One way to make money less abstract (or demonstrate that a credit card is also finite money) is to include the child in some simple financial decisions. For example: set a budget for shopping at the market and ask for help in deciding which items to take, making it clear that it is not possible to exceed the defined limit.
This helps the child to understand that things come at a cost and that choices and renunciations must be made at all times – from a simple grocery store to an outing or a birthday present.
The culture that turns money into a taboo dates back to our inception. Try to talk openly about money, teach your child that you have to work to buy what you need, and show that you care about using money wisely.
Of course, this shouldn’t become an obsession and you shouldn’t even expect a 3-year-old to fully understand the value of money, but it’s important that the child understands that toys and gifts don’t fall from the sky. And that’s okay – it’s very positive to see money as a way to get what’s important to you.
Even phrases such as “must have done something wrong to have so much money” or “it’s stingy because it saves money” seem innocent, but they can have a big impact on how an individual handles money in their adult life.
If your child is already at the age of earning an allowance (experts suggest starting at 6 years old, on average), the ideal is that he learns from an early age how to save a part of this money to fulfil a desire later on.
What if, instead of putting it in the good old piggy bank, your child has already started their first real investment? At banks, it is possible to open an account in your child’s name and CPF and, together, set a goal with a defined value and deadline.
Based on this goal, the app allocates the amount invested in the most suitable portfolio and you will be able to follow the income in a simple and clear way. What better way to plant the little investor seed in children than to let them see their money pay off?
And since we’re on the subject of investments, it’s important that you also do your part to invest in your children’s future. Those with small children have time on their side! If you intend to leave the money invested for at least years, such as reserving it for your children’s higher education, for example, a good option is to make a private pension.
This is because, after 10 years, you will pay the lowest possible income tax rate of 10% on income. On any other investment you would make, the minimum tax rate would be 15% – and in the long run this can make a big difference.
Want to see it? The chart below compares two funds yielding 100% of the CDI for thirty years, with an initial contribution of $10 thousand and a monthly contribution of $300. The lowest pension tax rate (the 5% difference) saves more than $18,000!
The perpetuation of consumer culture is something that depends on us. There’s nothing wrong with buying gifts and toys, but it’s essential to realize (and teach!) that the company of parents and loved ones has much more value than material possessions.
I even propose an exercise for you to do: Try to remember happy memories you have of birthdays in your childhood. I bet you remember the party, or a family trip, or your grandma’s cake better than a specific toy you got.
Around here, we already have this philosophy very clear! Our daughter was born on April 21, and it has already been decided at home that her birthday holiday is sacred – and the gift will always be for her to choose the day’s tour itinerary. Is there anything more special to a child than the unconditional attention of parents?
Oh, and since we’re talking about experiences, how about one day sit down with your son and create an investment portfolio together? Children have a natural interest in things that are part of the parent’s universe, and it can even be a fun exercise to talk about dreams and financial goals from a child’s perspective. I know that from a very young age, I loved drawing what my dream house would look like in the future. Imagine if I had taken the first step towards this dream when I was still little?
I hope this article has inspired you to think about your children’s future and shown you how it is possible, in a playful or more educational way, to include this subject at home. It’s something I would really like to have learned early on and I think it would have made a huge difference in the way I handled money in my youth!