It is never too soon to teach a child about the value of money. If they have the right skills and attitudes towards it, then they will be able to manage it effectively and save for their futures. Here are eight tasty tips that will help you to educate your children and get them money savvy and sorted.
As soon as your children can count, introduce them to the idea of money. Show them the different coins and get them used to what they represent and how much they are worth. Pour a huge pile of coins onto the floor and help them to sort the coins into piles. By turning it into a game you will help them become increasingly au fait with the different amounts and coins.
Need vs Want
We all know what it’s like to want that pair of amazing shoes or delectable digital camera, but we also know that these are not necessarily things we need. Help your children to learn the difference between things they need to survive, and things that are nice to have by taking them around the house and getting them to identify which is which. Just by going through the contents of your fridge you can help them to learn the difference – butter is a need but chocolate is a want, for example.
The value system
We all have different values when it comes to money and how we handle it. Some people live to save, others live to invest, while others prefer to micro-manage every penny. Even though your children may not understand the ins and outs of money management and what it means, take time to explain why you are saving certain amounts, what happens to that money in the future, and how it all works.
A great way of helping them to learn is to give them their own money specifically for investing or saving and letting them do it themselves. This will also show them how savings are not about instant gratification and help them to understand the long-term nature of investing.
The home bank
Using pocket money or the same money mentioned above, pretend that you are a bank and offer your kids interest on money saved with you. Explain how interest works and, each month, show them how their money has generated more money and how this will only grow if they leave that money alone while continuing to make deposits. Challenge them to save a certain amount over three months, six months or a year and reward them for achieving their goals.
Children need to learn that they can’t just have any toy or item that they want, when they want it. Give them an allowance, talk about how much the toy costs, show them how long it will take to save for that toy, and encourage them to put money aside for it. Not only will this make them realise that they can’t have anything they want, it will also make them realise how badly (or how little) they want that item.
Break the allowance
When you give them their pocket money don’t hand them one £10 or £5 note – break it down into smaller parts so they can actively place £1 into the savings jar, £1 into the toy jar and so forth. We recently reviewed the Moonjar kit that has three boxes – one for savings, one for spending and one for sharing – which encourage children to sort their money out appropriately. This is a great idea to use in your own home too.
Store and review
As your children spend their money ask them to keep all of their receipts and to enter their purchases into a ledger. After a year, or six months, review the ledger and the receipts so they can see where their money is going. This is an excellent way of helping them to see how quickly money can disappear on sweets or tat, and how important it is to use their money wisely.
The weekly shop
What better way to get your older kids to understand the value of money than to get them to handle your weekly shop from time to time. Start out by drawing up a list of things you need for the house, then give them an allowance, and then let them choose the items for the shopping trolley. There are few things more enlightening than the realisation that £100 will only get you so many groceries and that you have to cut back on some things.
I’ve already started with some of these ideas and I must admit that they’ve helped me refine my financial strategies too, I guess you’re never too old to learn something new. Hopefully these will spark some brilliant ideas for you too.
Business by Petr Kratochvil
Five Pounds Note by Petr Kratochvil
Roll Of Money by Anna Cervova
Coins by Peter Griffin
Shopping Carts by Peter Griffin