Formal education may be down to teachers and tutors, but teaching your kids about personal finance is often all on your shoulders. Getting them to understand what money is and what it does can be hard enough, but teaching them about money management can be a whole different ball game.
To help make the whole thing easier, we’ve jotted down some simple tips to get you started:
Money has to be earned
Being a kid is great; you have no financial strains or stresses, don’t have to spend money on food or clothes, and don’t have to slog away for eight hours a day to earn money to pay for the above. But that doesn’t mean you can’t teach your kids this valuable lesson early on. It can be a hard concept for small children to get their heads around, but making sure this is drilled in early on will set the tone for later in life.
To help drive this home, think about setting a few simple tasks for your children to undertake in exchange for small change. For example, if they do an excellent job of tidying away their toys; they receive 50 pence, and if they help mum with getting the washing out of the machine for a week, they receive £1.
Sometimes you have to wait to buy things you want
Another difficult topic children struggle with is the idea that you sometimes have to wait to buy the things you want. This can be tough to teach, but you and your kids will reap the rewards later down the line. The ability to delay gratification has been shown to predict how successful a child will be as a grown-up. Therefore, it’s important that kids learn that if they really want something, they need to wait until they can afford it.
It’s a good idea to invest in a small savings pot for your child to fill with the money they’ve earned (from the above point) and ensure they use this to buy something they really want. Whether it be a magazine, a new toy, or even a trip to the fairground, this simple activity will set them up for the future.
Money should be spent wisely
Teaching kids that money is finite is only half the battle – albeit an important one. We all have different views on what ‘wise spending’ is, as well as different things that are important to us. And above all, it’s imperative that you reiterate this to your child when teaching them about being sensible with money.
It’s always a good idea to take your children shopping with you and show them how and where you spend and where you may scrimp. For example, if you choose an own brand over a household name, explain why.
I hope these tips will help you start the money conversation today. In the meantime, I'd love to hear back from you (email@example.com) on 'What are the top 3 financial skills or money habits (in order of priority, if possible) that should be taught to kids before secondary school (age 11).
Until next time....