There is never a bad time to start teaching your children about money. Younger kids may see something they want, and the concept that you can’t afford it may be totally alien to them. Older children and teenagers are more likely to sponge off the bank of mum and dad and will become resentful if you don’t hand the cash over on demand. Therefore, an early financial education is necessary to alleviate your stress as a parent, as well as providing a framework for money management for their future as adults.
But where to start? To help you, here is some valuable advice.
Use real world examples
Whenever you can, take the opportunity to explain the importance of money.
For example, when standing at the ATM, tell your kids that the plastic card you placed into the machine does not have magical properties. The money that comes out of the slot is something that you have worked for, and if you didn’t go to work every day, there would be nothing in the bank for you to spend on life’s essentials.
When at the supermarket, give your children a little bit of money to spend. Explain to them the difference in how things cost, and how the amount of money they spend on one item will determine how much money they will have to spend on something else. This should encourage them to look for cheaper versions of similar products.
When your children have school activities that need paying for, explain the need to save to make it possible. Your kids will soon realize the importance of money when they realize fun things are at stake if there isn’t enough money to cover them.
The use of pocket money
Every child should be given pocket money, as this is a practical way to teach them how to save. When they see something on tv that they particularly want, they will begin to understand the principle of waiting until they can afford it. Making a chart will help younger children see how much they money they have, and how much they will need to save until they reach the target price for the product.
Pay in cash
The way we use money is changing. We tend to use our cards to pay for items online, rather than using actual banknotes and coins. It’s important we keep things real for our children, letting them see that money is a physical, not a virtual concept. When we buy something, our money disappears, so children will begin to understand our pockets are not bottomless and that spending money actually means something.
A little bit of history
Children love history, and there is a great article online about money and currencies that can be used as an invaluable history lesson. Knowing where money comes from, and how it has developed over the years, will benefit our children, especially as we now live in a world where money is spent online and through electronic means.
The concept of earning money
Older children and teenagers should be put into the position where they can earn money for the things they want in life. For example, there will be many chores your kids can take on which will alleviate your housework burden, and give them the opportunity to earn some money by taking them on. You might mix things up a little with the concept. Less time-consuming chores will earn them less money, but longer tasks will increase the amount of money they can receive. As in life, we (generally) earn more money the more hours we work.
There are many ways teenagers can find employment. From getting a paper round to child minding for neighbours, they can prepare themselves for employment in later life. When they get to this age, you might also limit the amount of pocket money you give them, as they should become reliant on the money they have earned for themselves.
Lead by example
Finally, your children are always looking to you for example. If you fritter away money on items you want and don’t need, your children will notice. Whatever you do, be responsible, and explain to your children why you do what you do in the way you handle money. Tell them about the items you are saving up for, and how long it will take to do it. Don’t make shopping trips a leisure activity as that will undermine the concept of saving. Be a good role model.