As a parent, there are hundreds of important lessons you want to pass on to your children. But a key one is their relationship with money. And about being responsible and understanding its roles in their lives. After all, it is all-consuming for so many of us. Here are some suggestions as to how to teach your children about money.
Many children love a quiz, so why not use this to educate? Set younger children a quiz to help them learn some basics about money.You can set challenging questions that help them see see how money works in their world. They can learn about different types of money and what different items cost. You should get plenty of questions back!
There are many ways you could do this. Some may wish to hand out money as a reward for good behaviour or tasks carried out, rather than as an automatic payment.That is not for us to decide, but it can help many a child.
Budgeting helps a child understand a little bit about how adult life works and the sacrifices their parents have to make. It could help to sit down and plan a budget with a child and decide what they want to spend any funds on. It may also help to include an item that will require them to save up over a number of weeks or months. Something that cannot be purchased immediately. This concept can also be applied to a single event – a big day out perhaps. Pick an event they’re looking forward to and agree how much they can spend. Then ask them to plan what they’d like to spend on.
Finally, discuss your own budget with them, so they understand the sort of tough decisions you have to make on a near-daily basis.
Use old jars or plastic containers as a quick and easy way for children to watch their savings grow. As a child my bank (Natwest) ran a piggy bank scheme that rewarded savers with a new piggy bank form their collection.
If you are out and about on a shopping trip, use only cash and get your children involved by them handing over money and receiving any change. They can understand the process better. Over time you can involve them in more of your financial affairs such as banking transactions and checking bills etc. It will help teach them about monthly budgets, responsibilities and more. Involve them as much as you are comfortable with.
As a child I remember setting up a stall on the drive and selling items whilst also doing a snooker-playing marathon for charity. It helped me understand money and also I hope made me a better person. Always try and get your children involved on such occasions once old enough. School fetes are obviously a good starting point.
Shopping list challenge
Set a shopping list with a target budget (maybe a little higher than you’d normally pay) and challenge your children to find ways to save money while you’re out shopping. This will serve them well once they have to fend for themselves. They can learn to economise, spot offers and shop efficiently. They will also learn that buying everything you like the look of is not acceptable.
At some point in their future, they might need to borrow some money, so explain the basic principles. Explain why people need to borrow money, and the risks involved, plus the advantages. This is a good way to teach your children about money. also explain different methods of borrowing and what that entails.
I had a bank account from an early age, and loved the responsibility it gave me. It made me focus on looking after money. Even the tooth fairy money went in there! Most banks now have accounts designed to get children involved in managing their money. Pick the account features and level of access that is suitable for the age of your child.