Talking about money can often be a tricky topic of conversation but teaching your children from a young age about financial independence is skill that will last them a lifetime. And in your quest to help them, you might come across a few things that could help you too!
Various studies have shown that children’s money habits are formed by the age of 7, so the younger they are when we start teaching them about spending and saving the better off (both financially and well-informed!) they’ll be.
Pre-school is the perfect time to start teaching little ones about money and that sometimes you may have to wait to buy something. The process of delaying gratification can be introduced with sweets. Offer your child one sweet and say they can have one now or wait and have two later. This idea of waiting will help them discover that the longer they wait, the better the outcome.
Once they have mastered the art of waiting, you can create ‘Spending’ and ‘Saving’ jars together. They can use money in the spending jar for small purchases, and the saving jar for something they really want. Every time they get money, divide it between the two jars. The more they save the shorter the wait for what they really want.
This habit of saving will then form the basis for all their financial habits well into the future – and it all started with sweets!
As your children grow, they will start to learn about choices and consequences. This is the ideal time to teach them about how to spend money. It’s important that children understand that money is finite and doesn’t grow on trees – sadly! When you go food-shopping explain why you chose an own brand product over a big name brand for example.
You can even task them to get a few items and make sure they spend less than £5 all- together. This real-world experience will help them realise the value of money and help them make financial choices based on the money they have.
Now they’ve started secondary education, you can start to introduce more complex financial ideas – that will also help with their Key Stage 3 maths. Talk to them about how saving more in the short-term will help them get to their long-term goal faster, as well the concept of compound interest.
Have your children calculate compound interests on their savings and ask them to find the best savings account. Let them have a think about something they want to buy, perhaps a new tablet or phone and ask them to calculate how long it would take them to save for it.
By demonstrating how savings work and how much they need to budget for saving and spending, you’ll be teaching them a great skill. These activities also help to remind you, how to budget too.