There are a variety of important things that parents need to be able to teach their children. One of these things is how to deal with finances and look after their money. After all, the last thing you will want for them when they are adults is to find themselves struggling to manage their debt and seeking debt help and advice. But the best way to approach this is to share your knowledge with them about the financial facts of life whilst hopefully teaching them some fun money lessons at the same time.
The trouble is, so many parents simply do not know where to start when it comes to teaching your kids about finance.
So, to help, here are 10 ways that you can teach your children to help them have a secure financial future.
A common phrase is that money doesn’t grow on trees. Something that as an adult, we are only too aware of. However, chances are that our children simply don’t understand this concept, that money is not infinite and plucked out of the air.
A great way to demonstrate this is to show your children how you withdraw money from a cash machine, whilst carefully explaining to them that this money has come out of your bank account. You could even show older children the cash withdrawal transaction on your bank statement so that they can see the money leaving your account.
It is important that your child learns how to budget. Kids need to understand that they are unlikely to have enough money to buy ALL the toys they want and will have to choose the one that they would prefer to buy the most.
Set an example for them by telling them about the different things that you would love to buy and why you can’t go out and buy each and every one.
If your kids are anything like mine, they’ll have very little patience. If they receive money, they will want to be straight off to the shops (or online!) to buy that toy that they have always had their eye on.
Instead, you should encourage them to temper their impatience a little and teach them the pleasures of delayed gratification. Easier said than done, I know!
A great way to show them that you take a careful approach to your spending is to show them that you are thinking about a bigger purchase. Shop around with them, ask them to help you to compare the different deals that are out there.
Explain that saving a little more will help you buy something better, of higher quality, longer lasting and more fun.
It’s the difference between blowing their cash on the latest collectable like Shopkins and having the money for an XBox game or even a console.
Saving can sometimes get a bad rap, especially when compared to spending. It is a good idea to teach your child that it is cool to be a saver. Especially when saving gives you a reward such as the ability to buy something nice for yourself.
Teach your kids that it’s often the little things that are bought on a daily basis can add up to a significant item of expenditure over a year. Curbing your occasional spending can really help you to budget for bigger ticket items.
A simple way to teach kids about the power of saving is to have a savings jar that you as a family pay into. Show your child how the money builds up over time, and let them know when you are using that money, such as for a holiday or a new TV.
Make a game of it. Try the Penny Saving Challenge by saving the same number of pence each day that matches the number of the day in the year. So on the 35th day of the year, you add 35p to the savings jar, all the way up to more than £3.50 in December.
This will give the family around £667 extra cash to spend at New Year. It’s one of those fun money lessons that really will make an impact.
Being able to monitor your spending habits is an incredibly useful skill to have in later life, and this is something that you can encourage right from childhood.
If your child receives pocket money on a weekly or monthly basis, why not encourage them to make a chart? This could contain the pocket money that they receive each time, as well as what they spend it on. That way, they can keep an eye on where their money is going.
Having something in mind is a great way to achieve a goal. This is particularly true when it comes to saving.
If your child is struggling with the concept of putting away their money, then why not ask them to create a wish list of things that they want to buy?
You can write down how much these things are going to cost, as well as how many weeks pocket money that is, showing them how long it will take them to save for it.
Tech-savvy kids could create a wishlist on Amazon which will not only teach them how much things cost but is a great resource for relatives wondering what on earth to buy for their next birthday or Christmas present.
On the subject of presents for kids, the board game Monopoly is a great choice if you want to teach your kids about money and how a little bit of a strategy can make you a winner!
We also enjoy Payday – go through the working month buying and selling items and see if you end up the richest player.
Charity is important, no matter your generation. However, if a child doesn’t understand why charity is important, or how to donate to them, then this won’t carry on growing.
Encourage your child to give a portion of their savings or pocket money to charity, not all the time, just sometimes. That way, they have some awareness of what is going on in the world around them, and how some people are not lucky to have the same money as them.
We all love spoiling our children, there are no two ways about it, after all, we love them. But spoiling them can have a negative impact later on in life.
You should try and set some boundaries on spending and what they can get, as this shows them that you are not always able to get what you want, and sometimes you simply have to wait for it.
Having a bank account is something that we all need to have later in life, so why not introduce this concept to your child from an early age.
Go with them to the bank to open their own account, and encourage them to pay money into on a regular basis.
This means, that when the time comes to open an adult bank account, it won’t be quite as much of a novelty for them.
You may be tempted to take charge when your child wants to spend out on a particular item. However, it is better to let them make their own decisions.
If after a couple of days or weeks they decide that they have made a bad decision, then they will realise that they have wasted their money.
This will encourage them to think more carefully about the choices that they make in the future.
We all want the best for our kid’s future, and one of the aspects to think about is their financial stability. By teaching them everything that they need to know about money, you are giving them a great start that they can build on.
How do you teach your kids about money?