Last week we talked about cutting back on life’s luxuries. Today we carry on the same theme with a focus on children.

It’s so easy to spend on kids. Even when you’re dealing with your last few pennies if they ask for something you almost always want to say yes. The unfortunate consequence of this is that they become spoilt, unruly and difficult to control both at home and at school. For kids that love their food they become obese all too quickly.

Children are very perceptive; even before the age of three they can have you completely wrapped around their little finger without you realising it.

The beauty with children, however, is that it doesn’t cost much to keep them happy. There are so many things you can cut out without compromising at all on their well being.

Nappies

This is a special bug bear for me. In the long run nappies are far more expensive than terry nappies (matewela) but so many people insist on using nappies even when they can ill-afford them. If you have a maid to wash the nappies that makes it even easier to commit to terry.

Nowadays you can even get terry nappies designed to look like a disposable nappy so that they are easy to put on. Don’t write off terry nappies before at least trying them.

Hand-me-downs

Children grow extremely quickly. Don’t buy clothes if you don’t have to. Ask family and close friends to share their old clothes with you and when your child outgrows them, pass them on to someone else. Your child won’t mind and won’t even know the difference – well, not in the early days at least.

Breastfeed

One day I was at a friend of a friend’s house and she spent all day on the phone bugging her baby daddy to come and drop some money off for formula! I don’t know if this was a strategy for just hustling him but in the end he did drop off the money and she went off to get the formula when she was perfectly capable of breastfeeding.

Breast is best. It’s what God designed so it baffles me when people choose, instead, to spend lots of money on dried cow’s milk for their offspring.

Cerelac

Another big luxury. Phala is, in fact, more healthy and several times cheaper. For the fortunate few, their children reject Cerelac and prefer likuni phala or even just phala made from mgaiwa from the market.

If you can’t really afford Cerelac don’t even start buying it. Get your child used to the cheaper, healthier stuff.

Purity Baby Food

I’ve never seen anything more ghastly in my life. I don’t know how the marketers convinced us that foods that have been packed into glass bottles and sat on a shelf for weeks or even months are a premium product compared to their fresh alternatives but they have. It is far healthier to buy fresh vegetables and fruits from the market, boil them up and mash them for your kids. It’s also a lot cheaper.

This is one area where you can save lots of money immediately. Purity and other pre-packaged foods are inferior goods compared to fresh food. The only plus in my opinion is the convenience. If you plan in advance, you should be able to feed healthier, fresh food to your precious babies.

“I highly recommend getting your career established first and then having children.” Arizona Muse

Is there something I’m missing? People immediately assume that if a man or woman is rich then his or her children are also rich whilst the parents are still alive. This is not necessarily so, or at least, I personally believe that what belongs to my parents is not by default also mine and certainly I would never think to demand things off my parents for no good reason.

Bill Gates made the wise decision to give all his money his charity. I think this is probably the best thing he could have done for the mental health and wellbeing of his kids. Having to earn gives people concrete goals and ambitions. This also explains why large lottery wins are well known to destroy the life of the recipient. One minute, you know what your goals and ambitions are the next a large cash lump sum confuses your status quo.

The problem with getting something for nothing is that it almost certainly kills ambition and the will to get up in the morning.

If I know that I can ask my dad or mum to buy me a mansion and that they’ll get it why would I bother working for it? 

As a parent you want the best for your kids and that desire can and frequently results in parents throwing things at their kids. In so doing, they destroy them. One generation builds a fortune the next destroys, it’s so cliché and yet it happens again and again. Parents fail to learn from the examples of others.

In South Africa the showy children of the middle class are called izikhotane (the boasters). They buy very expensive clothing at their parents’ expense and spend time in parks playing loud music, drinking and plain simply wasting time.

It doesn’t take a genius to predict what the future of most of these kids will be like. Although this social phenomenon is not as yet a major issue in Malawi it does exist on a smaller scale. Mostly, it’s not spoilt children wearing expensive designer clothing; but they are growing up with an entitlement mentality, drinking excessively and have no appreciation of the real value of work and money.

You might be thinking that you don’t have enough to spoil, your kids but the izikhotane are generally not from wealthy backgrounds, most of them live in “locations” and their parents are hard-working for the money that they so carelessly burn.

In South Africa, there is also a higher tier of good-for-nothing girls and boys whose parents throw mansions and posh cars at them. They will almost certainly burn the entire fortune the moment their parents give them access to it or die.

School can’t teach your children the value of money. You need to do that. 

You don’t show your kids you love them with expensive gifts and holidays; if you truly love them you give them a good education and your time. Quality time is what they need. 

My sister and I used to go cycling with my dad when we were kids and sometimes we took long family walks altogether. My mum helped me with my maths homework, my dad with geography. 

You probably spend freely and willing on your children, however, take a moment to think about whether you’re passing on an attitude to money that will set them up for success or failure. It’s up to you.

“My mum says that I was born 45, and I do remember at six thinking that I should be earning my own living.” Keira Knightley 

Time is just as precious as money. Time and money management go hand in hand so you will find a person who struggles to do one also has immense problems with the other.

Fact: everyone wastes both some time and some money, what differs between individuals is the degree to which we waste.

My very first lessons on not wasting pertained to food waste. If I left food on my plate I got reproached for it and either had to finish it there and then or keep it for later. My father and mother both argued that if I had dished the food myself I had made the decision of how much I wanted to eat and so I had to finish it. “You've made your bed now lie in it,” as it were. I learnt that my eyes were bigger than my stomach so I started putting less food on my plate.

This is one thing many kids around the globe do and most parents take the stance. It may seem like such a simple thing but it helps a child appreciate that resources are limited and that you can’t afford to waste them.

I’m not saying force your children to finish their food, no, what I am suggesting is that you monitor how your children waste and explain why wastage is bad.

Time wasters

If your child spends the whole day playing and they’re too tired to do their homework properly later explain why it’s better to do their homework before going out to play. That’s a time management lesson. They learn to prioritise and there is a transferrable lesson on managing money.

I didn’t think about it then but when I was in secondary school the same people consistently loitered around. You’ve got to wonder why I felt the pressure to work hard to manage my time wisely and they didn’t.

I had a study timetable that ran from the very beginning of term to the end. My dad never failed to emphasize that he had to make sacrifices to afford the school fees so I felt the obligation to at least try.

On a weekly basis I managed to stick to my timetable 70% to 80% of the time and that was okay; but why didn’t everyone else feel the need to honour their parents in the same way? I can only assume it was because they had been indulged by their parents and thought they were entitled to fun and enjoyment.

I had been taught that there is a time for everything. When my dad thought I was working too hard, he told me, he wanted me to be a balanced child.

The road to success is paved with good time management

To move up in the workplace requires supreme time management. Getting to work on time, meeting deadlines, taking on more and more volumes of work. Being smart at school does not necessarily mean you will do well in the work place; however, those that managed their time well in school are the same people that do well at work.

Some people genuinely find school difficult but they still try very hard at it and manage their time wisely. These people are set up for workplace success. Those that are effortlessly smart and don’t have to try hard at school will tend to have more trouble in the workplace. Teach your kids to manage their time and you’ll also be teaching them to manage money.

“I believe every human has a finite number of heartbeats. I don't intend to waste any of mine.” Neil Armstrong 

Every decision brings with it an opportunity cost – the opportunity cost is the thing that you cannot have or cannot do at the same time. The decision you ultimately make brings along with it a tributary of consequences.

Opportunity cost is an important concept for both you and your children to understand. I learnt the theory of opportunity cost when I was about 14 in economics and an economics test revealed that I didn’t fully understand it. When I did “get it” I thought it was a very profound concept.

Opportunity Cost of Money

If you spend MWK10,000 on one thing, that money is gone and cannot be spent on anything else. One of the easiest ways to teach kids the concept of opportunity cost is to give them a fixed amount pocket money.

I didn’t receive pocket money as a child except when we went on holiday. On the first day of the holiday my dad would give me and my sisters a fixed amount of money and that was it. That money had to last the duration of the holiday, if it ran out that was it, no more shopping; food and accommodation was (obviously) covered by the parents.

Having a fixed amount of money forces you to budget. Kids don’t have access to banks and credit facilities so if you emphasize that they won’t get any more money when the pocket money runs out your child will take that seriously and make astute decisions.

These are the thoughts that will probably be running through your child’s mind: a) I can either spend this money on one big thing that I really like or lots of things that I like so-so – basically, quantity over quality.

Testing the boundaries. Children will naturally test the boundaries. If your child comes to you and says they need more money and you don’t make them justify the request then that’s what they will continue to do. You will be robbing them of lessons on how to budget and this lack of knowledge will impact them as adults.

What is the right amount of pocket money?

If your child needs money for daily needs such as a school lunch, transport and so on, you can either give them money every day or give them a few days worth of money and see how well they manage it.

When you give a child money tell them what the money is for and how you expect them to manage it. The child doesn’t have to do what you say, they can make their own decisions and in so doing they learn what they need to learn.

Say you give your child what they need for the day and they handle that responsibly, you can then reward them by giving them the responsibility of several days worth of money. In doing so you show that you trust them and they in turn will try to maintain that trust by budgeting the extra cash you provide well. If through their own folly they misspend their money then the consequence may be, for instance, that they can’t buy a school lunch but must make and take lunch from home! That may be adequate punishment to make them spend more wisely.

If your child has all their meals at home, you buy all their clothes and take them to and from school then there is little reason to give them money. This is why I didn’t get pocket money. You may nevertheless choose to give them a little bit of money to manage or tell them to ask you for money when they need something.

Whatever path you choose make sure there are plenty of lessons along the way.

 “Failure is only the opportunity to begin again more intelligently.” Henry Ford    

Some kids are shrewd negotiators! You probably know one or two, they ask for what they want and they can justify exactly why they should have it! These kids provide us with ample amusement, it’s so cute; when you watch them, know that you’re watching a future CEO in the making.

The important question is, is your child one these child genii?

The word “no” makes kids think about how they can justify what they want. If you normally say “yes” to your children’s requests they don’t have to think much about why they want what they want; “no”, on the other hand, forces thought.

I’m sure you can think back to a time when you were a child and a parent said no causing annoyance and a period of intense thought. Perhaps you sulked or cried. I learnt not to sulk, cry or throw tantrums – such behaviour did not result in the desired impact on my parents, quite the opposite, in fact. Instead, I learnt to justify.

Shopping for school food – how I learnt to justify

I used to be jealous of those of my friends that received MWK10,000 for pocket money at a time when I was getting MWK3,000. This was in about 1999 when that was a lot of money.

As a boarder at school, in addition, to pocket money you also got food to take to school. I know some kids who were just given a bunch of money to get what they wanted but I on the other hand had to write a list of what I wanted and shop around for the best price! Having shopped around for the best price, I presented the list which totalled how much I needed!

I know some of you are thinking this was torture but I didn’t think of it as such, for me, it was just a game.

My dad would then go through the list and question some items. One time, I had listed several varieties of crisps and biscuits that were imported and he asked why I wasn’t supporting local industry. In the end, I had to downgrade the higher quality imported treats for the cheaper local produce. Even then, local crisps and biscuits tended to have less variety and were of lower quality than imports but my father explained why from an economic standpoint it was better to buy local. I was fifteen at the time.

If my father had just given me the money to shop for what I needed I would have missed a few lessons:

Firstly, the lesson on why it’s better to buy local produce rather than imported goods.

Secondly, I would have missed out on many negotiation sessions with the shrewd businessman that is my father.

Thirdly, I would not have learnt to bargain-hunt. After a few years you learn which shops are cheapest for which items and you organise your shopping to go to all those places.

Finally, I wouldn’t have learnt the extent to which I can compromise. My dad didn’t want to give me too much money so the total cost had to be reasonable. To save money sometimes I would have to go for the less convenient option, which wasn’t as hard as I first thought.

I only have space to provide one example here but I hope it was adequate to provide you with a few thoughts with regards to how you will teach your kids about money.

“Diplomacy is the art of letting someone else have your way.” Sir David Frost

I find it unfortunate that a good majority of parents choose to spoil their kids and give into their every whim. It could be that they think they are giving their children a good life but they are forever crippling them. Their children are destined to be poor financial managers prone to giving in to the pull of instant gratification; that is, when they want something they will get it as soon as possible whether or not it’s a good financial decision.

Being a good money manager and wealth creator does not just happen, I don’t even believe that it’s something that is taught in schools; it 100% has to be taught at home and those lessons need to begin the moment your child is born!

Over the course of June I will impart the lessons I believe set me up for being good with money.

Mandasi

I have loved mandasi forever. People laugh at me when I stop my Mercedes by the side of the road to buy mandasi because they think the behaviour is incongruous with the vehicle. I beg to differ.

Anyway, when I was a child of about five to seven years old I used to go to my father as often as I thought was reasonable to ask for 10 tambala to buy mandasi from the bottom of our road; even then that amount of money was nothing. Did my father always give it to me? Certainly not! Sometimes he said no,

“I gave you 10 tambala yesterday,” I distinctly recall him saying.

“Yes, but I spent that already, I want more mandasi!”

“You don’t have to have mandasi every day.”

He wasn’t being mean, he doted on me, he simply didn’t want to give in to my every want (and he didn’t want me to get fat). This taught me that just because you want something it doesn’t mean you have to have it, even if it is cheap; importantly, I learnt to wait.

Today mandasi cost about 20 kwacha and most parents would be inclined to just say yes if asked for it. Do not. There is a lesson in the word no, especially if the child can see you’re not just being mean. Explain why you’ve chosen to say no.

What should I wear?

I also used to love asking my mother what I should wear, her answer was almost always the same,

“Wear what you want to wear.”

This placed the burden of deciding squarely on my shoulders. However, she didn’t always like what I chose to wear. If she didn’t, she would explain why what I was wearing wasn’t appropriate for the occasion. It’s only when I grew up that I appreciated how much of a role that played in my decision making ability.

Many people I’ve worked with in the past have commented on how they like my ability to make a good decision almost instantly but this skill did not just materialise. It was developed over a very prolonged period of time. I can now make reasonably complex decisions in record time and simple decisions within seconds.

Your child is not going to learn how to make decisions when they start work; you need to get them making decisions now.

If they make a decision you don’t agree with don’t force your opinion on them. Tell them why you don’t agree but allow them to keep their opinion. It’s hard to do this but in doing so you’re setting your child up for success. You’ll be empowering them with the courage to decide.

“The more decisions that you are forced to make alone, the more you are aware of your freedom to choose.” Thornton Wilder 

I dashed into a shop to buy whatever it is my dad had sent me to get. Upon my return he asked, "So where is the receipt?"

"Oh, I forgot!" I said, annoyed with myself for I so hate to disappoint my father.

"You forgot? Business people don't forget. If you forget to ask for receipts you won't make a very good business person, my girl!"

I was only seven years-old. I sat in the back of the car dejected at the prospect of my pending doom as a businesswoman.

You might be thinking I was made money-aware at too young an age but I'm glad I was. Bad habits form early and once a bad habit has been etched into your persona it is very hard to give up. When you are very young and impressionable you absorb and accept things much more easily.

Receipts are important. That's what I learnt that day.

If you start a business you'll need receipts to offset against tax but even if you are not running a business, receipts are your only barometer for how much money you are spending.

Learning the Habit of Asking for Receipts

I have a challenge for you to carry out over the next week. Get an envelope. Put it into your handbag and every time you buy something, ask for the receipt then make a note of what you bought on it. At the end of the week lay out your receipts and note down everything you bought and how much it cost you on paper or, even better, in a spreadsheet.

I can almost guarantee that a) you will be surprised by how much you spent over the course of just one week and b) you will realise that you didn't need to buy some of the things you did.

Do I always remember to ask for a receipt?

Not always but 95% of the time I do and this practice has served me well. I recently started my own business and when it was time to get my annual tax return sorted out I didn't struggle to find my receipts. They were all saved in one folder and any receipt that had been received via email was already stored in a specific folder on my computer.

Receipts received via email are ALWAYS immediately saved to a unique folder as a PDF in the format:YYYYMMDD {Amount} {Item}. This makes them supremely easy to find. So, for instance, the receipt for the artwork of my recently published book, "Chichewa 101", is saved as: 20120619 MWK9000 Chichewa 101 Artwork.

This way, when you need to summarise your receipts in a spreadsheet you won't even have to waste time opening the PDF document because it's there in the filename.

What does all this mean for your personal wealth goals?

The sooner you get used to keeping receipts the better you will get at understanding what you spend your money on and the easier life will be if you one day start your own business.

Running a business alongside your regular job is the best way to boost your income but you need to have business habits before you decide to start a business.

"Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." - Charles Dickens