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Teaching your children about money

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One of the most important lessons you can probably teach your child is the value of money. Teaching your children about money from a young age will help them to become regular savers and responsible spenders in the future and this education can start almost as soon as your little ones can count. There’s no harm in introducing them to the concept of money straight away, by providing them with information and opportunities to learn through observation and repetition.

children saving with piggybank

Play games

As children get a bit older, you can play games that enable you to have fun while teaching money management skills. It may be old-fashioned compared to the latest computer console, but a game of Monopoly is a good place to start, as is the Game of Life and Payday. If you can’t prize them away from the computer, then there are digital games and apps that could also be useful, such as the Sims and Tycoon games.

Earning their own

Giving a child the opportunity to earn their own money is probably one of the most effective ways of teaching the value of money. Paying them an allowance each week for fulfilling their duties is a sure fire way of putting the theory into practice – children will be a lot more savvy about money when it’s their own. Having an allowance will encourage them to think about what they really want to buy and whether they can afford it.Piggy bank family

There’s no hard and fast rule as to how much money is an appropriate allowance, that will be for you to decide depending on their age, your family income and what that money is supposed to cover.  For example, if you expect a teenager to buy their own clothes out of it, then their allowance needs to be able to cover that. If it’s just for extra spending money then it needn’t be as much, but the amount should be sufficient enough to provide your child with some extra money so they can learn how to handle it.

It’s also a good way to encourage saving, so if they want a certain item they will have to work out how much to save, and for how long, until they can afford it.

Percentages

Paying your child’s allowance in small denominations – for example if their allowance is £5 you could give them five £1 coins – will enable them to easily save a percentage each week. Help them to work out how this money will accumulate over the course of a year. This goal setting is fundamental to learning the value of money and saving. You could take it further by demonstrating the concept of interest income on savings and consider paying them an interest on the money they save as an additional incentive to putting money aside.

Savings accounts

Taking a child to open their own savings account will help embed the habit of regular saving; just remember to let them withdraw some of their money for a particular purchase if they want to so as not to discourage them from saving at all. Another good way of putting theory into practice is to use regular shopping trips to teach children about money and budgeting; it’s not just a case of throwing what you want into a trolley.

Price comparison

Spending smarter at the supermarket with coupons, sales, price comparison etc can save hundreds of pounds over the course of a year. Demonstrate how to plan economical meals, avoid waste and use leftovers efficiently. Show them how to check for value, quality and to research a big ticket item before buying. It’s also worth educating young people on how to evaluate product advertisements and to consider whether that product really is the best or whether there are cheaper alternatives that will offer better value overall.teaching your children about money

Allow young people to make some spending decisions of their own. A good discussion about the pros and cons of their spending plans will help them to really think through their purchases. Encourage them to use common sense and to do their research before buying.

Credit cards and finances

Teach children about credit cards and how they work, but be cautious about making them available to young people. One of the most effective ways of teaching money management is to be open with family discussions about your finances. Communication is a very effective teaching tool and parents can underestimate the impact they have on their children’s lives. Making sure your children know how you achieved what you have in life, and where you could have done things differently, will all serve to benefit their future financial health.

 

 

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One Response to “Teaching your children about money”

  1. Nikky Bella

    My kid asks some money questions, and I answer them the best way I can to make him understand that money is earned the hard way, so he can realize its value and use it responsibly.

    Reply

About Linda Ram

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