Depending on how little your little ones are, teaching them how to manage their money might seem a long way off yet. But new reports indicate that the average student debt stands at around £15,812 so perhaps it's never too early to lay the groundwork for helping your children to understand money and, where possible, avoid debt.
The Secretary of State for Children, Schools and Families, Ed Balls recently proposed that personal finance lessons should be introduced in primary schools. I love that idea and think schools have an important role to play in teaching children about money. I know my 5 year old has an inherent willingness to listen to anything his beloved teacher tells him, while he's more inclined to disagree with most things I say! Moreover, I will never understand how I left school with no concept of budgeting or personal finance and yet wasn't allowed to go on to University unless I had grasped mathematical milestones like Pythagoras' Rule and algebra. Which, incidentally, I've never once needed since.
But Lisa Wynn, Director of Corporate Potential and Coaching for Dads believes that changing the way children are taught about money at home is instrumental in paving the way to a debt-free generation. Lisa is a master certified coach and qualified wealth creation coach and she's convinced that giving children too much too young will result in a flurry of young people growing up with unrealistic expectations and bad money management skills.
Lisa says; “As parents we are often guilty of creating our kids’ bad habits and then criticising them for having them! By teaching youngsters from an early age simple ways of managing their money, from buying them their first piggy bank to opening up a savings account in their name, we can help to ensure they don’t make the same mistakes that we might have made.”
Lisa has outlined five tips below that she uses with her own daughters to teach them about money:
A simple piggy bank will help to teach even the youngest kids the importance of saving and also the reward at the end once it is full! Once they get a bit older open a bank account for them. They can go to the bank with you and pay in their own pocket money. Not only will your child feel more grown up, it will also teach them the different ways of saving their money.
The Power of Negotiation
Negotiation is not such a popular practice in the western world nowadays, although it is a powerful skill to have. I have taught my girls to negotiate for their pocket money each week. This has helped them develop this new skill and use it in a way to benefit themselves. They can see the connections between good behaviour and being helpful and the money they receive.
Try speaking to your children about money in a positive light. Children are often used to negative connotations like “Money doesn’t grow on trees!” but explaining the importance of money and keeping within a budget in a light-hearted way will help children remember this and pick up good habits for the future.
Challenge your own demons
Think about what your parents taught you about money. Do you want your children to inherit the same beliefs? Changing your own view of money and the bad habits you have picked up will help you become a great role model for your children.
Try tough love
Don't think that bailing them out is always the best thing to do; we all need to learn from our mistakes from time to time. With older children if a small, unexpected crisis crops ups it may be better to take a step back and let them work it out for themselves. This will allow your child to use the skills they have learnt, under the watchful eye of mum and dad.
If children grow up uneducated about money and budgeting, whilst being sheltered from issues such as debt they will merely follow in our footsteps and pick up bad habits. By introducing some fun ways for your children to learn how to look after their own money at home, by the time they reach school age they will have already learnt the value and importance of money and the art of saving for things that they really want. You never know you too may even learn something in the process.
Thanks to Lisa Wynn for her advice for helping children grow up to be confident and sensible with money. I'm definitely going to try some of these steppings stones with my boys and particularly like the idea of giving them some control over their finances. I think credit is a key concept to explain to children too, and pocket money can be a brilliant way of teaching that concept from the earliest years. Playing shops is another practical way of making money management fun from an early age.
We'd love to know what your top tips are for teaching good money management at home. So drop us a comment if you've got any tips worth sharing!