What are the best ways to teach kids about money? There’s no doubt that this is an important task for any parent these days.
I didn’t really understand money all that well when I started earning for the first time as an adult. I often wish that I’d learned more about money as a child so that I was better able to make good decisions around spending.
The thought often niggles at me about how I’m going to prevent my beautiful little girl from making the same financial mistakes as my husband and I did! I don’t want her to have to owe money to anyone. I want to make sure she has the best start in life possible, raise her to appreciate the value of money and get her to understand that if she can’t afford it, she shouldn’t have it.
It must be really hard for some children (and parents) today when faced with peers who have the latest gadgets, who wear the height of fashion and get to go on holidays 3 or 4 times per year. We’re not one of those families! (And even if we had the money, I doubt we’d be the height of fashion.)
At the moment, because our child is so young, she’s not at the age where she’s noticing what other children have got in terms of possessions and such like. But I’m sure that day will come where she will say that little Charlie from school was wearing some brand new trainers or playing with a new iPad. When she’s older still and going out with friends, maybe moving out into her own accommodation – how will she learn to budget her finances and not get into debt? How can I help her deal with these things?
I raised this question recently on the Money Saving Expert Forum and received some really helpful comments from other people who have similar concerns. I thought I would post a summary of the feedback I received.
How can we teach kids about money?
- Involve your child in everyday tasks to do with money, such as going shopping, showing them your purse or wallet and let them handle change. Some children don’t get to see much actual money these days as a lot of shopping is done online or with credit / debit cards!
- Focus on having great family experiences together rather than buying personal possessions.
- Depending on your child’s age, give them a small allowance that is theirs to do with as they wish. If they want to buy a new game for their computer, they could save up for it. You could set up a bank account for them with a debit card so that they can get used to paying for things out of their own personal bank account.
- Talk to your child about financial tasks you’re doing, such as why you’re writing out that cheque or paying for something online.
- When your child is old enough to understand, explain terms such as ‘mortgages’,’credit’, ‘insurance’ and debt.
- Teach your child about the flaws of advertising. Big manufacturers spend a lot of money on advertising products. Just because that toy on the TV looks fantastic is not to say that it hasn’t been made cheaply and won’t break within 10 minutes!
- Teach your child to love second hand goods. What is one person’s rubbish, is another person’s treasure! For me personally, you can’t beat that feeling of triumph when grabbing a bargain at a charity shop, on ebay or at a car boot sale.
- Save for your child even if it’s only a little amount each month. This money could be used to fund some or all of university fees or go towards a deposit for a house – and it’s up to us as parents to make sure that the savings are spent in such areas (and not to fund social nights out at university!)
- When your child is older, encourage volunteering for local charities or business ventures that your child has an interest in. Getting some real life skills in dealing with people, businesses and money can make all the difference.
- If you have had money problems yourself, be honest with your child if you think they can handle it. Such honesty may mean that your child will vow never to get into the same situation as you did (my parents did this with me in relation to smoking – I’ve never touched a cigarette in my life).
My child is my world and I want to do all that I can to protect her and educate her to make the right decisions throughout her life. I think all of these points are worth bearing in mind when raising your child to learn about the value of money!