Money is such a big part of your everyday life, so is important that the youngsters in your family have a strong understanding of the value of money, budgeting and savvy spending.
It is never too young to start instilling this knowledge, so here are some helpful tips to get those conversations started.
Introducing money market dividend can be a great way to teach kids how their savings can grow. A money market account earns higher interest than regular savings, and the dividends from this interest show how money can work for them over time. By explaining how money in these accounts can grow, you help kids grasp the value of saving and the benefits of compound interest for the future.
Take a trip to the bank
Banks are places full of conversation starters. You can start by taking your kids with you when you have to do some personal banking. Showing them how to deposit money and then seeing the balance rise on your online banking app can help explain how money works.
Whilst you are there, you should open a children’s savings account. By having their own account, children will feel grown up and responsible, and lessons about budgeting and earning money can begin. Plus, you will be able to start them out in life with a financial cushion.
Introduce a pocket money budget
If you are going to be giving your children pocket money, introducing a budget is an important life lesson.
Kids go through phases of loving certain toys or brands, which inevitably leads to them wanting to buy all the merchandise and accessories. By going to the shops with them and explaining that they only have a certain amount and that a toy will cost a proportion of that, kids can get a visual picture of spending.
You may find your children end up not buying a certain toy in favour of saving it for a larger one which is another great life lesson of saving for the future.
Give rewards for earning and learning
Getting a job is something that most of the population have to do and you can introduce that concept early on for children.
You can set up a system that rewards your children for jobs they can do. Harder jobs can mean they earn more. For example, loading the dishwasher could be worth £1 whereas washing the car could be worth £10.
By working for their money children will begin to learn the value of hard work and the satisfaction that comes from doing a job for pay.
If you wanted something a bit more fun, you could start doing mini quizzes that test your kids on different topics such as money, school subjects and interests. You could either give money prizes or tokens which they can save up and exchange for presents.
Demonstrate how you spend and budget
A lot of spending is done either online or using a debit or credit card so it can be hard for adults and children alike to visualise spending.
When you do the weekly shop, take cash out as a budget and ask your children to help you get enough food for the week under a certain amount. Before you go plan your weekly meals, so you have a list of essential ingredients. By doing this you are helping them to think about the prices of food as well as the need for certain items versus the want for certain items. You never know, this could benefit the whole family by saving money and reducing food waste.
