Kids and money

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Money (and pocket money) is not a topic that will grace all classrooms. Financial education has been part of the national curriculum at secondary school for five years now but is not compulsory for primary schools.

Just one in four children aged between 7 and 17 have been taught about basic money management at school, according to the Money Advice Service. Only 43% of 12 to 17-year-olds feel confident managing their cash. Teaching children about the value of money, the concept of saving and eventually investing, at home is an important task for parents. Today’s children will need to take more personal responsibility for their finances as the state or an employer won’t do it for them. Many mums and dads opt to start teaching their children about money before they get to school age.

Dee Holmes, Children and Young People’s Counsellor at Relate, the relationship support charity which works in partnership with Lloyds Bank on the M-word campaign, said, ‘Talking openly about money with children is a good habit to get into – helping them to understand about saving and spending from an early age, for example, will encourage good financial habits for life.’

So how can you teach children about the value of money and eventually investing?

Spend pocket money wisely

According to a recent study one in seven (14%), three-year-olds receive weekly pocket money, rising to over a quarter (26%) for eight-year-olds. Get involved with how they want to spend it. If they want something more expensive than what they have, help them with how to save for it. A clear money box can help them see their money grow.

Explain where money comes from

It’s natural for children to think that money grows on trees, so explain that you have earned it by working. Offer pocket money in exchange for simple chores like tidying their bedroom, to show that nothing comes for free.

Allow them to make decisions

Once children have their own money, let them decide how to spend it. If they buy a DVD and then later don’t have enough to get some sweets, they’ll soon realise that they can’t have everything and that it’s important to prioritise.

Set a good example

If you practise what you preach and are smart with your own money, then children are more likely to follow suit. When you receive bills, this can be an opportunity to explain all the different things that cost money, and how you use your earnings to pay for it. Get them involved in managing the family purse strings by taking them to the supermarket and get them involved to help them build an appreciation of the cost of everyday items.

Find the best savings vehicle together

Once your child is able to understand saving with a bank, choose an account together. Whether it’s a Young Saver or a Junior ISA, going through the research process with them is a brilliant way to help children understand saving and develop early saving habits. Explain why you have chosen a certain account and this will start to introduce children to savings terms, tax and interest rates.

Digital money

It’s easy for children to understand the concept of hard currency, but the concept of digital money is less easy for children to get their heads around. They may be confused if they only see you use cards to pay for shopping or pay bills online. Take the time to teach them that money can be transferred electronically and people are increasingly cashless.

Go Henry is a brilliant digital account to help children manage their money in a responsible way. For children from the age of 6 upwards, the account them teaches them to manage their pocket money, and save for things they want and be rewarded for chores or good behaviour. See our Go Henry review here.

 


Photo by MI PHAM on Unsplash