We’re all aware that money is what makes the world go round. But how do we actually learn about it? Although financial education has been introduced in schools, it is recognised that children are most influenced by their parents and carers when it comes to money.
Although in recent years the UK government has invested more into teaching children some core skills, money and monetary practices are still something lagging some way behind when it comes to teaching children about such a crucial aspect of their lives.
Opening up the conversation and creating games around financial awareness can largely help children manage their own finances as they get older, making transactions easier for young adults to understand and equally increasing appreciation for gifts and financial aid.
Model How Money Should Be Used
It is no secret that our childhood experiences and observations shape our behavioural patterns into adulthood. When teaching a child about money, one of the key ways you can encourage certain behaviours is to implement positive financial techniques yourself which they are then likely to mirror.?
For example, when out shopping ask them to tell you the different prices of products, voice your money-related decisions out loud, and get the children to hand over money at the till or enter it in the self-checkout machine.?
By including them in your financial thought process, they will become more familiar with considerations that should be made before spending and develop an increased understanding of commercial exchanges. Plus, this is a great way for extra bonding with the children in your life.
Hugo Anglesford of fintech company Doddler comments: “Teaching children how to use money in a responsible manner is of course very important. However, what many people neglect to teach their children are those simple things around money, like how to spot an obvious scam and the basics around profit and loss. These types of things can be hugely beneficial to children as they get older and move into adulthood.”
Increase Familiarity With Money
Next, you can begin familiarising them further by introducing their own piggy bank or allowance. Depending on the ages of the children, you can speak to them about how they should save their money for something they really want and count with them the money saved up. If you have younger children, you could use visual techniques to teach them the values of different coins. For instance, put a pile of 1p coins next to a 10p coin to demonstrate the difference in value. The more children understand the value of money, the more they will be able to use it wisely.
Set Spending Limits
As children learn more and more about money, they will be able to identify its use throughout day to day life. A fun task could be to take your child out shopping for their usual school or nursery lunchbox items and provide them with a spending limit (source: Keren’s Nursery). As this might be new for some, feel free to offer them choices for their typical lunch items and help them calculate the various cost combinations.?
Once again, this will increase familiarity between the child and money, whilst also offering them more independence to use the money in the way they see fit. A step further would be to only pack the items they chose for their lunch one day. This places a consequence ? good or bad ? on their spending choices and reinforces the influence of money in their daily life.
Budgeting For Kids
Now it’s their turn. After children have learnt basic budgeting tactics, they are set up for life. They should now be ready to actively apply the budgeting skills to a real world scenario. If you go for a day out, as an example, list all the potential expenses associated with the trip, put the cash to cover these costs in a purse or wallet, and ask the children to pay for each item as you go. For older kids, you could think about continuing to give them pocket money and monitor how they spend it. If their allowance disappears quickly, discuss how they can make payments last longer or split the money into different instalments. No matter the age of your children, budgeting skills are vital and can really help them as they grow into young adults. And remember, your actions will influence them the most so be aware of your own spending too.??
