Before you make a New Year beeline for the gym, why not...
8 practical ways to teach your kids about money
There are things we all wish we knew when we were younger.
In hindsight maybe we should’ve paid that student overdraft back a lot quicker – or not taken it in the first place? And why didn’t anyone explain to me that the discount for opening a high street store card didn’t outweigh the amount of interest I’d pay over the months it took me to repay it?!
Looking back it all seems obvious now. Money management is one of life’s most valuable lessons, so let’s use our experiences and teach our kids at a young age so they don’t make the same mistakes.
Last month we asked you on Facebook for your best money tips for the kids. Here are some fun ideas to help you get started…
Let them see the money
I know this sounds strange (of course they see money!) but hear me out. More often than not I’ll use my debit card, especially for more expensive purchases, simply because my wage is paid into my bank account so it’s more convenient. This concept can be too abstract for little ones, as physical coins and notes don’t come out of your purse or wallet.
We’ve heard stories of kids asking for items and after being told it’s too expensive they say “Just put it on the card!” or “Why don’t you get a payday loan then?”
Let them handle cash and, if you’re a card fiend like me, explain how a debit card or loans work in a way that they’ll understand or relate to.
Put them in charge of their own money
Pocket money seems an obvious idea but there are ways in which you can make it more meaningful.
It’s an annoying phrase, and I’ll know I’ve turned into my mother when I start saying “Money doesn’t grow on trees”, but now that I’m older and wiser I know there’s a lot of truth in it!
If you want to teach your kids that you have to work hard to earn your money you can get them to help around the house to ‘earn’ their money.
You can also encourage them to sell old toys if they want to buy new ones. This is a great way of keeping the house clutter free too!
Excuse the pun, but the flip side of the coin could be to pay into an investment policy which matures when they turn 18 (instead of pocket money). That way they have money to put towards more meaningful things later on in life, such as learning to drive or a deposit for a house.
Make saving fun for the younger ones
Let them choose a piggy bank and make it seem fun and exciting. Hopefully this will give them positive associations with saving.
And they’re more likely to use it if they’ve chosen it themselves. When they hear the clink of the coin hitting the bottom make the same excited face as when you hear the ice cream van!
Create a chart with colourful stickers so they can keep track of how much they’ve saved. You could allocate a different colour to each item they’re saving for.
Challenge the older ones to save
Instead of using a piggy bank, encourage them to use a bank account. It will make them feel more ‘adult’ and makes money easier for them to monitor but harder to get hold of!
Encourage them to keep track of saving and spending with a computer spreadsheet. It might sound boring but kids spend most of their time on computers these days so it’ll provide a break from Facebook if nothing else!
Play a game
Let them have some fun and help them to learn without them realising it. If you’re creative you could make up your own money-related games, but for those of you that are short on time there are some fantastic resources online.
There’s lots of information on the Personal Finance Education Group(pfeg) website (the UK’s leading financial education charity). It includes a fully interactive online game for children in key stages 3 and 4 and post-16, which helps kids to learn how to confront financial challenges in a fun and engaging way.
For younger children there are games such as Fun to Save, a safe place where children can have lots of fun while they learn about different aspects of money and saving.
It’s also worth knowing that from September 2014 financial education will form part of the compulsory national curriculum for all maintained schools in England. It’ll be a part of Citizenship for 11-16 year olds and there’ll be stronger links to it in maths lessons (across all ages).
Encourage donating to charity and/or volunteering
Help them to appreciate how lucky they are by helping those less fortunate or contributing to a good cause. By inspiring them to volunteer, not only can you spend quality time as a family and instil good morals, but you’re also teaching them how time can be more valuable than money and how the two are related.
It’s good to talk
It’s important to talk about money. If you can’t afford to buy them something they want, discuss it and explain the reasons why. It can be a difficult subject, particularly if you’re dealing with debt and find yourself saying ‘no’ more often than not. Discuss where your income comes from and the bills you have to pay and you might be surprised at how understanding they can be.
Our recent Debt Trap report, written alongside The Children’s Society, revealed that more than half of children (58%) in families with problem debt say they worry about their family’s financial situation. Talking about money openly and discussing their worries could go a long way to quashing any fears they may have.
The best things in life are free
Help them to appreciate that having money isn’t everything. Possessions will come and go but the love you have for one another will always grow. It sounds trite, but despite them sometimes being a bit irritating you still love ‘em.
We all know how money worries can get the better of us, but once all’s said and done you can’t buy the joy and happiness you get from spending (free) time together. Talk through happy memories together and hopefully you’ll demonstrate that the longest-lasting ones aren’t about money or possessions.
On that last cheesy note, I’d like to say a big thank you to everyone that commented on our Facebook post with personal tips and experiences of teaching kids about money. If you’ve got any that you’d like to add we’d love to hear from you. Post your ideas in the comments box below or add them to the ones already on Facebook.