How to teach your children about money
The concept of money is something needs to be taught, even though it is probably the case that you cannot remember how you first ever learnt about money – it just sort of seemed to happen! The truth is, at some point you will have been taught about the world of money and the value of money. However, most of your knowledge is most likely based on experience.
As a parent, trying to engage your kids in learning about the world we live in, a deeply transactional and contractual one, is not an easy task. We develop an understanding for money both theoretically and experientially. In mathematics we are thrown in at the deep end from an early age, where numeracy is aided by the concept of money; e.g “Ben bought a bag of sweets which cost £70, he gave £1, how much change will Ben receive?”
However, learning about the when money operates in the world and learning about the value of money are very different things. The former, is introduced to us in school, whereas the latter is up to us and how we are brought up with money. Here you should find some helpful tips surrounding teaching your child about money in todays world.
Give them pocket money
In recent years, we have seen a decline in pocket money due to the rise in “invisible money” – referring to pretty much all transactions being made online, on a card or on an app. We are becoming an increasingly cashless society, and this is having an effect on the concept of “pocket money”.
However, you should aim to set your children an amount of money each week or each month, depending on what you see fit. Make sure the amount is clear and consistent each week or month, this will teach them about the limits of money – when it is gone it is gone.
By providing a sense of ownership of money, rather than simply going out and buying them an item of desire, will allow them to understand how much certain things cost, and how much they need to save each week or month in order to afford what they want. The concept of being able to actually afford something before you can have it is then instilled in your child from an early age.
If you would prefer to deal with your child pocket money digitally, consider taking out a goHenry account, it is a pre-paid, pocket money car and app that is to be managed by a child parents. It is basically used and looks like a debit/credit card, with the name of the child on it. This may be an effective way to teach children about online banking.
Pocket money also puts the responsibility of keeping the money which is theirs safe, if they lose it it is gone – it is important not to subsidise this as this would be counter productive.
Take your child shopping with you
Likewise with children loosing out on pocket money due to the digital age, the boom in online shopping means that less and less children are physically going shopping with their parents to see what good equal to what kind of price tag. If they never see this, they will never understand that some products have a higher price tag and a larger quantity of things equals more money handed over at the till.
If you can, aim to pay in cash when you take your child with you. Allowing the child to hand the money to the cashier is both fun for the child and will help them to visualize and understand the transaction which they are playing a role in. Simply buzzing in a contactless car or apple pay gives a child the impression that money comes from nowhere and overall, lesses the value of the items on a conceptual level. If you do pay by card or app, ask for your receipt and explain the amount to your child and how the money is processed via bank account.
Play “guess the cost”
Guess the cost is a game that can be played at virtually any place, as long as you are surrounded by items which cost money. Hand an item to your child and have them guess how much money they think it costs. If your child guesses correctly, or around the right amount, you can offer them a small reward. It is interesting to repeat items to see if they can remember how much that item costs the second time they are presented with it.
A piggy bank
To encourage your children to learn about saving money, purchase a jar which can be used to house spare change around the home. You can explain to your child that each moth you will aim to buy something together with the money that is saved up in the jar.
Gradually add to the jar and count the coins as an activity together to calculate how close you are to buying that item. This savings jar or piggy bank will enable your child to understand how to save money for and why we do save; not everything we want is instant.
Open a children’s savings account
A savings account for children enables them to explore more adult methods of money saving than simply a piggy back – this is a great option for a slightly older child, perhaps between the ages of 10-14 and beyond. It teaches them how a bank operates in simple terms, how to keep their own money safe and eventually they will begin to understand how interest works.
There is not age restriction on a savings account, you can even open one up for a new born baby!
In today’s world, ensuring that your child has a clear understanding of money, where it comes from and how it works is proving more difficult than ever. Because of this, we can find ourselves so desensitised to our own spending that our children are sure to follow the same path, but this is dangerous. Consider taking away some of the tips listed above to teach your children basic and vital life lessons which will ultimately stand them in good stead in the future.