Teaching children about money management skills from a young age is incredibly important to establish healthy financial habits from a young age as well as empowering independence so your children can make informed decisions about money as they grow older.
Here are some of our tips that could help you teach your child the importance of money.
Start Early:
You can start to introduce basic money concepts to children as young as 3-5 by using age appropriate activities, number games (such as Monopoly Junior), role-playing, and storytelling. The activities don’t always have to be written and learnt from a book, think about practical activities which are fun! How about a trip to the supermarket and asking your child to do the budgeting and adding up?
If the importance of money is started from a young age your child will gain a better understanding and it will more likely stick with them as they grow up, which will result better budgeting, saving, and responsible spending.
Teach Budgeting Skills:
You can introduce age-appropriate ways for children to earn money such as chores or entrepreneurial ventures, Once money has been earned you can discuss the value of hard work and responsibility in managing money. You can introduce simple techniques for to understand the concept of budgeting too. Encourage children to set savings goals and allocate money for different purposes (e.g., spending, saving, giving). It’s also important to let your child have management of their own money and use their own mind to decide how they want to spend it, a few mistakes along the way can also be a learning opportunity before they are grown up and making the mistakes later down the line. This will also help your child to prioritise needs over wants and resist impulse buying.
Open a Savings Account:
Most banks have the option to open a Children’s Savings Account or a Junior ISA account. You can start this from when your child is born up to the age of 15, on their 16th birthday, the account will transfer to an adult account. You must be over the age of 18 to open this type of account. There are many comparison sites which will compare the accounts that are out there as well as the highest interest level.
Your child’s savings account will be a good opportunity to teach them about interest and will show the benefits of saving regularly.
Be Transparent About Financial Decisions:
It important that you teach children where your money comes from and how you pay for things such as your mortgage. It’s a good lesson to involve your children in family financial decisions (within appropriate boundaries) so they know how things will work once the grow up. You should always encourage children to ask questions and express their opinions about money matters to gain a better understanding.
By implementing some of these ideas, it will help empower children to make their own financially responsibly choices in life.