How and when to teach your children about money
Financial literacy is an important life skill – it helps us make sound financial decisions and achieve financial wellbeing. We know all too well that financial literacy, like any life skill, takes time and effort to master, but a strong foundation earlier on in life, a willingness to learn and a supportive environment can help.
As parents, teaching children about money can sound like a daunting task, and it can take more than just a few quick lessons to get them thinking about how to be financially responsible and aware. So, if you want your kids to start adopting good money habits, when should you start teaching them about it and how?
Making an early start is crucial. If you’re children are receiving pocket money, the lessons should start then and there. Pocket money can be a really useful tool to help introduce the concept of spending and saving.
We’ve listed some examples below that can help to get your kids thinking about the value of money and how they can make the most of it, while still having fun:
- Next time you’re at the supermarket, try giving your kids a budget for the family’s dinner that night and see what they can come up with! If you want to make it a bit more challenging, give them a budget per person and let them work out how much they need to spend.
- Take your child shopping and ask them to write down a list of the things they need and want. Then ask them to find out the different prices of those items from different retailers. This is a great way to teach them about the importance of comparing prices.
- Establish a weekly age appropriate chore list that’s linked to pocket money. If you can, pay this pocket money in a mixture of physical notes and coins rather than to a bank account. This will teach your children about the source and destination of cashflow (the way money moves), with emphasis on the fact that ‘money doesn’t grow on trees’ and that it needs to be earnt
- After their first pocket money is received, give them with three piggy banks or jars, labelled ‘Needs’, ‘Wants’, and ‘Savings’, and ask them to deposit the following percentage amounts into each, 50%, 30%, and 20% respectively. Introducing the importance of budgeting and managing their money in a responsible and disciplined way may not sound like much fun, but these are some of the most important money lessons your children can learn, even from an early age
Overall, making an early start is always the best option and keeping the conversation open and honest with your children is the key. Don’t be afraid to get them involved in the family finances, to whichever degree you’re comfortable with, once they’re in their teen years.
Your beliefs on money can influence your financial attitudes and behaviours, and are often shaped by your experiences, education and relationships. Importantly, the same also applies to your children.
With this in mind, whilst we have provided you with some points to help get the ball rolling, it’s important to be mindful of something; Children also learn a lot by watching how you approach your own earning, spending, saving and investing of money.
If you have any queries about this article, then please feel free to contact us.