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From saving up pocket money to receiving their student loan, it’s more important than ever for our kids to grasp the concept of money.
I recently read an article that said that eight out of ten parents think it’s important to ensure their kids know how to manage money but have no idea where or how to start.
Is it a School Responsibility?
Many think it should it, and research from financial firm M&G found that many parents believe that subjects such as savings, value for money and budgeting should all be taught at school.
It is any wonder that many parents feel like this when they themselves may be in debt or struggling with day to day bills, the rise in childcare costs and food.
While I do believe that it is a critical life skill, I still believe (rightly or wrongly) that parents are the greatest teachers. Being able to show that you are financially savvy, and have the skills and confidence to handle finances, might just be one of the most important things you can teach your child.
Make money real.
I don’t think it’s ever too early to teach kids about money, especially now, when we, as a society are (me included) are choosing to do more and more of our banking or shopping online, deeming notes almost invisible. The most many kids see of money is it coming out of a cash machine, and think this is the norm.
For ages, my 4-year-old just assumed you got stuck your card in, and it gave you cash back. I wish!
Explaining that the hole in the wall was run by the bank really helped and that a bank was there to look after money that I’d earned working.
Playing shops with real coins helps them actually see and feel money, not just the fake plastic stuff.
Make Saving Fun
We started at the tender age of three offering pocket money. This encouraged and reiterated the fact that this was their money, and once it was gone, it’s gone.
They both had little jars, so every time they got birthday money or did something good, say, had no accidents all week or helped tidy up, they would have 20p for their jar.
This helped encourage them to save toward something they wanted, aka sweets.
If they were extra good, we would match what they had in their jars when they came to spend it, so if they had £2, we’d add £2 and add any extra birthday or Christmas money to the fund, so they knew exactly how much they had to spend, and could watch it decrease as they spent it.
Talk about Money
It may be a bit embarrassing for you, but talking to your kids about how much you earn is a great way to get everything out in the open and you all talking about money.
I used to dread it when the kids asked for an ice cream when we’re out, as I knew I just couldn’t afford it. After saying “sorry, I just don’t have enough pennies” too many times, the kids asked me why not?
So I explained, rather red-cheeked, in front of friends as well, that I work part-time, in the evenings, while they sleep. That I do earn money but it’s a little bit that goes towards making sure they can go to ballet and swimming, but not enough for treats every week.
I showed them my wallet, and they asked why the two brown coins couldn’t buy them what they wanted. I then had to explain about different coins and notes and their worth.
It wasn’t easy, and to be honest, was mega embarrassing for me, but I realised then that if I came clean earlier, I could have saved myself the hassle.
Now The Eldest is 4, she comes shopping and ticks everything off the list, and asks if she can extra in. It took a while, but she knows realises that mummy only has a certain amount with her and that the list comes first.
You’d be surprised how many of my friends kids with tweens know the value of a pair of shoes, but not a pint of milk.
Teach by Showing
Mine are still young, so I still pay for most things, but make them pay for sweets out of their own money. When we get home, we count out what they have left, so they understand where the money has gone.
I’m fully aware that as teens, I’m going to have to bail them out once or twice, but pain on putting a hard fixed date on repayment, like any bank would, but without the interest. (Come on, I’m not that mean!)
Okay, I’m not completely deluded. There’s going to come a time very soon when my 4-year-old wants something or the 2-year-old wants more sweets, and they don’t have any money left.
There’s also going to come a time when they start doing chores or start work, and realise that long hours don’t mean high pay, but isn’t this how we all learned?
That first job teaches us all that working hard brings in money, and then we get what we want.
Word of warning though, as I think they apply to any age: Trying to control what they spend their money on is a dud. Yep, it might be on something you deem stupid or a fad, but apart from mildly trying to advise them, even at 2-years-old, you’re pretty stuck.
Make it a Family Affair
Using coins, try and explain why you don’t have any money this week.
Take a coin out of the circle and explain that’s for the petrol, that’s for gymnastics club or soft play you did this week.
This is an easy way to try and explain the difference between a wage and disposable income.
When they get older, try and give them as much money freedom as possible.
Currently, with giffgaff, kids as young as eleven can choose month by month if they’re going to spend £5 every three months and only be able to call others on giffgaff or use the £5 a month and be able to call or text anyone, or £7.50-£10 and they can have some data and not just rely on WiFi.
Also, when growing up, my dad would give me £40 monthly to spend on catching the bus to college. I could either walk and have that £40 for whatever I wanted (the walk was over an hour) or I could catch the bus and have around £5 left over for myself. I loved the idea that I could be frivolous or sensible, and that it was my choice!
There are loads of ways to teach your kids about money, and these are just a few easy ways to do it.
Have you started to speak to your kids about money? Do you have any tips?