Children and Money

How to Educate your Children about Money

Educating your children about money can be an intricate task. Most children have no clue about money management and they need guidance on the value of money, on how to save money and how to spend money properly. No matter the difficulties, it is important to teach children how to manage money because it will help them develop proper spending habits from an early age, with a chance to become financially responsible adults.

Include your children in family discussions about money

Including your kids in family financial discussions is an effective way to make them realize the financial decisions you have to face on a daily basis. It is important to allow your children participate in family financial decisions, to a certain extent, because this will teach them the pressures put on the family budget and possible ways to anticipate them. Be careful not to make your kids feel guilty. If you need to cut back on the family budget, just teach your kids that this is a necessary step, but don't make them feel that they cost you money.

Teach your children how to budget

Budgeting works better at an early age. Have your kids set a goal on buying a specific toy, which is affordable and they could buy, if they learn to spend their allowance properly. Or, allow them to spend a specific amount on clothes during the month. If they spend it all during the first week, make it clear that they are not allowed to use more money on clothes. Be strict and do not deviate from this rule. It is quite a hard concept to teach your children that they have to wait until they get what they want and most kids are impatient and do not cooperate well. Yet, kids at an early age need to learn that if they want to buy something, they should wait and save to get it. In doing so, children realize that they should manage their money effectively, within certain limits and with a view to financial responsibility.

Teach your kids different spending categories

One of the best ways to educate your kids about money is to teach them about the different spending categories. Write down a list and prioritize each item based on your household needs and the money values you hold true. Typical examples include household expenses, kids' education, insurance, car expenses, savings & investments, travel and recreation expenses and more. Teach your kids different

Opening a savings account

Opening a savings account for your kids is an important to educate them on how to save money each month. Explain to them that they are required to save a small amount of money every week or every two weeks from their monthly allowance towards their savings account. A savings account requires a minimum balance of £25 to earn a small interest. Once the account is opened, even £10 every two weeks will add up to a good balance. But most importantly, your children will realize the value of money and the importance of saving money today for a more stable financial future.

Getting a summer job

If your child is a teenager, maybe it is a good idea to encourage them to get a summer job. Summer jobs are fun and a great opportunity to earn some cash, which they can then deposit into their savings account or buy what they want. For instance, £20 savings a week makes £1,040 savings in a year. And above all, they learn how to create a safety net for tomorrow's needs. By educating your kids about financial responsibility, you prepare them for major changes in their lives. When the time comes to get married, buy a new house, or prepare for retirement, your children will already have a safety net. As a parent, you are the number one influence on your children's financial behaviours, so the sooner you start taking advantage of everyday teachable money moments, the better off your kids will be and you will raise a mindful consumer, saver, investor, and giver.

Resources

Children's Bank Accounts