Tips To Help Your Children Understand Money
Learning to manage money is a vital skill we spend a lot of our time trying to perfect. At Lloyds Bank we believe it is important to start children on this journey as soon as possible.
It’s not always easy to know where to start, especially when, as a nation, we are used to being tight-lipped about money.
We’ve spoken to some expert parenting bloggers who have shared their top tips to help teach your children the importance of managing and saving money.
Kalpana Fitzpatrick, financial journalist and blogger, at MummyMoneyMatters:
- Start early
Start talking to your children about money as young as possible; when I say young, I mean as young as four. It doesn’t have to be serious, just introduce them to different types of coins or pretend play at home with a made up shop.
I often let my kids look at the coins in my purse and we talk about which ones have more value. We also look at other currencies to add a bit extra fun into the mix. Personally, I don’t bother with plastic coins – I let them look, feel and experiment with real money (but make sure you supervise at all times).
- Set goals and a dedicated savings account
It’s easy to say to children that they must save their money, but for young minds, it’s important to also set goals.
Talk to them about what they would like to save for and then discuss how they will do it and how long it would take them to reach their goal.
They can then put that money into a savings account. Putting it into an account with a goal in mind will encourage them to save and they will love seeing their money grow. This will also help build a good habit for when they older.
- Let them make mistakes
It’s important to give your children a consistent allowance and let them use it as they choose.
Yes, they will make mistakes, but I believe it’s better they make mistakes now with small amounts of money at a young age, rather than big mistakes with a larger amount of money when they are older, when the consequences would be far more serious.
- Educational days out
Get your children really interested in money with educational visits, such as the British Museum, where you can explore the history of money, or the Bank of England Museum.
You should also take your children into a bank, show them ATMs and cash deposit machines. Explain what they do and how the system works – let’s face it, most children think that money out of the ATM is free money that Mr Bank gives to mummies and daddies to buy toys!
- Encourage entrepreneurship
Encourage your children to be business minded. You can for day, for example, sell lemonade, biscuits or cakes.
The idea is that they understand that you should work for money and encourage them to use their initiatives and be entrepreneurs.
Ouissi from The Old Fashioned Mama:
- It is ok to say no
Don't be afraid to say no or to explain that you cannot afford to buy what it is your children are asking for. If the reason could be seen as an adventure or something exciting (you are saving to go on holiday or to move house) then involve your child in your financial plans so they see that not getting what they want today means they get to be a part of something better in a few months’ time.
- Know the value of things
Teach your children the value of things and to take care of what they already own. If something of theirs does get broken then ask them to pay a proportion of the replacement out of their pocket money and only buy a new one once they have saved up their share.
- Involve your children when shopping
Take your children with you when you are shopping and let them get involved in both the choosing and paying process. Explain to them why you are choosing a particular product (is it better value, does it come in less or recyclable packaging, what are you planning on cooking with it?); allocate them a small percentage of your shopping trip budget and let them choose something (the type of fruit, for example, or yoghurt); give them a set amount and let them choose a gift for a school friend; let them tell the butcher or greengrocer what you need; allow them to speak to & pay the cashier and retrieve the change.
Mummypages – one of the UK's largest online parenting news and resource based websites:
- Encourage sibling competition
No child wants to put their money away when it could be put to better use in the sweet shop, but they will if they are trying to reach a particular target before their brother or sister. Set a money goal of for example, £25 in eight weeks, and see which one of your kids can achieve it first. Sibling rivalry never did anyone any harm, so use it to your advantage and theirs – they’ll be scrimping and saving every penny so they win.
- Create money jar targets
Glass jars are a wonderful way to encourage your child to save – being able to see money building up is a great incentive. One of the easiest ways to help them save for something in particular is to place a money target marker on the outside of the jar. So, for instance, if they are trying to reach £10, stick little markers on the jars to show them how much they need to fill the jar to reach their target.
- Use a bonus system
You can encourage children to save through the use of a bonus system. For instance, for every £1 your child saves, you give a 25% bonus of a further £0.25p. Not only will this be a great incentive to get them saving more, but it will also teach them about numbers and percentages.
The views expressed are those of the individuals featured and are not intended to provide legal, tax or financial advice. The people featured are not necessarily Lloyds Bank customers.
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