Trying to teach your children about the world of money can seem like a daunting task but it is a crucial one. A study from Cambridge University said that most adult money habits are formed by the age of 7!
It shows the power parents have to shape money habits of their children, which will affect and influence financial decisions they continue to make for the rest of their lives.
We’ve compiled a list of ways you can teach your children of all ages about money, and how to make it something fun and interesting they can engage with.
Starting to teach your children as young as you can about money will benefit them more in the long-run.
Teaching about money doesn’t have to be a lecture though, children take away life lessons from their own experiences and things like games and films as well.
Chores and Pocket Money
Getting your child to complete age-appropriate chores in order to receive their pocket money is something that you can start relatively young and it helps instill the idea that you have to work for money.
Things can be simple like tidying up after themselves and putting toys away, to helping with the dishes and cooking as they get older and can take more responsibility.
Piggy Bank Savings
When your child is earning their own pocket money a piggy bank is a great place for them to start collecting it.
Using a clear jar instead may be even more appealing as they will actually be able to see the progress they are making as they add money to it.
It’s a great way to encourage children to save and work towards short-term money goals.
Take Kids Shopping
Taking your children with you when you go to the supermarket is a good way to start a discussion with your kids about food costs, branded items and the prices.
You can make a challenge out of it! One week, buy the non-branded item of a product, and the following you buy the branded version and compare.
Could you taste the difference? Was it worth the extra cost? It will help develop sensible shopping habits and will help teach them to consider whether the extra cost for something is actually worth it if there’s a cheaper option available.
Great bargaining skills!
Let Children Buy Things for Themselves
If you find your child wanting something like a small, affordable toy and they have some money in their piggy bank, let them buy it themselves.
If they have to physically take the coins out of their own piggy bank and hand them over to the cashier, it will leave much more of an impact.
Ask your child before they buy if they want it, or if they want to save their money to buy something else.
They’ll think more about whether they actually want it, than if someone else is buying it for them.
Playing “shop” or “cafe” is always a popular game with kids.
Next time you play, try to incorporate a real-life money aspect to it by pricing up all the items and set yourself a budget to show that you can’t always afford everything.
In the film Up you see the couple, Carl and Ellie, save up for their adventure together, only to find that they actually have to spend the money on “life happens” moments.
But the moral of saving up for what you want in life remains a clear one.
Charlie and the Chocolate Factory is another good one, at the beginning you see Charlie and his family living in poverty, but despite all the temptations he experiences whilst at the factory he sees his integrity as more important than money.
There are also a few money-themed board games out there:
- Pop to the Shops is aged for 5 – 9 year olds, it helps children learn about cost, purchasing items, and getting change.
- Monopoly is a classic! It illustrates the role of the bank, your duty to pay taxes and contribute to the community, and also what happens if you can’t pay up.
- The Game of Life follows your ‘life journey’, receiving money in wages but losing it too as you pay rent and have to fork out for unforeseeable circumstances. The winner is the player with the most money and “life tiles” by the end.
Older Children and Teenagers
Teach your children about money in other ways as they get older.
Pass on more responsibility to them for their own money and introduce ideas about long-term saving goals, bank accounts, and social responsibility.
Open a Bank Account
Savings accounts and Junior ISAs are good ways for your kids to gain a greater understanding of long-term saving and how different accounts and interest rates will help their savings grow. Introducing the concept of compound interest to your children may be a bit of a challenge but using a real life example and showing them that the more money they save, the more they can earn from it, will help.
Children’s savings accounts often get much better interest rates, up to around 4.5%, so setting them up with an account will encourage them to make regular deposits in order to see progress, and create good saving habits.
Children are legally allowed to start working from the age of 13 in the UK, but there are rules about how many hours they are able to work and when.
Use your own judgement as to when you think your child is ready to look for part-time work or a weekend job, but encouraging them to do so is a good idea.
Having to give up their free time in order to earn money will teach your child to value money more and appreciate how much effort and work it takes to earn a certain amount.
First Credit Cards
Before your child turns 18, you could give them their own ‘credit card’ in the form of a prepaid card. Ask them to give you a portion of their pocket money or Saturday job earnings, and load these onto the card for them.
When it’s spent, it’s spent! This is a great way to teach them about spending within your means, even when you can’t see physical cash handed over in the shops.
When your child turns 18, they could be able to apply for a basic credit card.
The limit is likely to be fairly low, reducing the risk of overspending. If they’re going to uni, a credit card can help them budget expenses, too.
Plus, it’ll be their first line of credit. If they use a credit card carefully now, paying it off in full each month, it’ll do wonders for their credit score.
This means when it’s time to get a mobile phone contract, broadband contract, or buy their first house, they’ll be in a stronger position.
Talk to your child about the responsibility of a credit card. Show them how to set up a direct debit to pay their card in full each month, and show them what interest rates mean.