Talking to Your Kid's About Money
When it comes to money and children, the two do not usually mix. It is up to the parents to teach their children what the value of money really is, and that means a lot more than showing them the basics of counting and how to recognise the monetary significance of certain coins.
Money can be tricky, on many different levels, and conveying a positive message about spending and saving is important. It's also important for children to know the difference between "needs" and "wants", and that not everybody has all they need (they already know that they have less than they want!).
Experts agree that a strong education in the basics of money will set a child up for life. That doesn't mean teaching them the ins and outs of the stock market when they're three. But it does mean teaching them the importance of budgeting from about age seven, and eventually telling them about bank accounts, credit cards etc.
Make it FunChildren learn by doing. Here are some ideas about teaching the basics of money that are so fun, they won't even realise they are learning!
- Have little ones set up a mock shop, where they can "sell" items such as unwanted toys, lemonade or painted pictures and drawings. Teach them the value of coins and have them learn to count and recognise them for what they are.
- Give your children a few pounds (as a special treat) and take them to a toy or sweet shop and let them do the monetary transaction with the shop-keeper themselves.
- Teach children about pocket money and allow them to raise their weekly income by doing more chores. Encourage them to save toward a specific purchase, and construct a chart mapping their progress. Many children are unaware that a lolly costs less than a video game: they need to learn the real value of things.
- Take your kids to the supermarket next time you shop. Make a strict list (with their help) beforehand and stick to it. Teach them the difference between impulse buying and the purchase of necessities. Show them the different prices of different things, as well as like for like (supermarket-brand cereal vs name-brand cereal, for example).
- Encourage slightly older children to make a list of needs and wants. They might want a new pair of jeans, but actually the two pairs they already have would do them for the next year. Help them to understand the difference between a necessity and a luxury, and help them work to attain what they want.
Set an Example
Children find it hard to understand that the family may have spent £30 for a pizza lunch on a Saturday afternoon, and that the same £30 can help sponsor a child in the developing world for two months. In fact, this concept is hard for many adults to understand as well!
For children to become responsible members of the world community, they need to think outside their own immediate surroundings, and try to understand others in other situations. The best way for them to do that, when it comes to understanding money as well as other things, is to set an example.
You can start by sponsoring a child through a charity, encouraging your children to sell some of their unwanted toys in a car boot sale and donate them to charity, or have them give a percentage of their pocket money to those less fortunate. Donating their time is even more important; they can visit a care home or accompany you to a soup kitchen on the holidays.
Make it CountAll children are different. Only you can gauge the maturity level of your own child, and when they are ready to learn more about the monetary system that surrounds us. As a parent, you will know when the time is right for your child to open his or her first savings account, and to explain the difference between cash, credit cards and cheques.
One thing is certain, however. The earlier kids are made aware of spending habits, budgeting, how to save and what money really means, the better they will be able to take care of their own finances, when the time comes. Good luck!