How to teach children about money

21 January 2019

Dear Friend,

Teaching your kids about money may feel at times like a tall order. Especially if you yourself are not great with money. But it’s important. According to personal finance writer Beth Kobliner in her book, “Make Your Kid a Money Genius (Even If You’re Not): A Parents’ Guide For Kids 3 to 23,” parents are the biggest influence on a child’s financial behaviour and the lessons kids are taught by age 7 can determine their money habits for life.

Our boys couldn't be more different. Little man wants to spend his money immediately and has in mind exactly what he wants. Big lad will save for something of higher value that he really wants. Perhaps it is an age thing and experts recommend that you take age into account when talking about money. But we are trying to talk about money and teach our boys the value of things.

With this in mind I thought it would be a good idea to share the expert advice that I have found through my research...

How to teach children about money...

1. Start early. It is never too early to teach your children about finances, especially today as Internet banking, online shopping and card payments makes money almost invisible. Play shops, play games with money like junior Monopoly, or the shopping game from Orchard toys.

2. Make saving fun early on. Giving pocket money from around age three can help children better understand the value of money, especially if you encourage them to save towards something they want. We try to encourage saving by matching what they put aside or sponsoring them to help them buy something of a higher value.

3. Let them do simple errands. From the age of ten children should be encouraged to buy simple things in a shop e.g. a loaf of bread or milk. If children have saved for something let them take their wallet and pay themselves.

4. Teach them to budget. Give them pocket money on the same day. Be prepared for them to spend it all quickly at first. Don’t buckle under pressure! As they get a bit older encourage them to write down what they spend.

5. Don't say we can't afford it. Experts warn against saying you can’t afford something. It’s easy to use this response when your child begs you for the latest toy but doing so sends the message that you’re not in control of your money, which can create future anxieties. Instead say: “We choose not to spend our money like that.”

6. Be a good role model. Parents have a great deal of influence on their children, and it is not just the positive messages that resonate. Children tend to copy what we do rather than what we say, so limit the amount of shopping trips as a leisure activity, as they might start to think that money is an unlimited resource and that spending is fun.

Saving up and waiting for something you want is really the key to money – if you’re able to delay gratification. - Beth Kobliner

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