How to talk to your children about money

Want to get your kids into good money habits? You need to engage them about financial matters. Here’s how to go about it

Child counting money

Family life is busy, and talking about money may not seem the most interesting subject for young children.

But if you are going to set your loved ones up well for the future, you need to start the conversation.

Recent research found that a quarter (28%) of UK parents do not speak to their children about money.* Some surveys suggest as many as half of mums and dads are ducking the issue.**

One of the reasons parents may not tackle the subject is because it’s an area which they struggle with themselves. But we can’t afford to sit back and do nothing – we need to teach the next generation how to handle money in a sensible way.

Teach children about money when they are young

As a parent, it’s crucial that you talk to your children about financial matters from a young age.

That way, you can build confidence, instil healthy financial habits, and give your little treasures the tools to start developing good money management skills.

This will serve them well in later life when they have their own money to manage.

A few mistakes made with a small amount of money spent on tat at an early age can be a useful lesson in finance. Bigger mistakes made with larger sums of money later in life can prove a lot more costly.

So what’s the best way to start the conversation?

Give children coins to handle

With society becoming increasingly digital and cashless, and purchases on plastic now very much the norm, our children will get fewer and fewer opportunities to see and handle actual money.

Address this by sitting down with your children and a wallet full of coins and notes, and give them the chance to handle real money. Explain what each of the coins is, and get them to talk about their colour, size and shape – and the numbers on them. Do the same with the notes.

Put money in a piggy bank

With very young children, a piggy bank or savings jar is a simple way to talk about saving – and make it fun.

Your little one can pop coins in and see the money mounting up before their eyes.

Play ‘shop’

Get your children to play shop at home. Encourage your child to buy things from you using real or pretend money – or get them to use their imagination and put a price on things they want to sell to you.

Talk to them and help them to understand that money can be spent on different things.

Talk while you shop

Before you go shopping – to a real supermarket – talk to your little one as you draw up your shopping list.

Once you’re at the store, get them to look at prices and compare the cost of various things. Explain how special-offer deals and discounts can mean you spend less. Show them till receipts.

You could also encourage your little one to choose between two items that they’d like – such as a toy or an ice cream. That will open up a conversation and help them to understand they can’t have it all.

Make pocket money a talking point

Giving children regular pocket money can be a great chance to chat about budgeting. It can also help little ones begin to understand the difference between saving and spending.

Explain that if they rush out and spend all their money on sweets, their cash will be gone in an instant. Then tell them that if they save up some of their money each week, they could soon have amassed enough to make a bigger purchase – for a toy or video game they really want.

Similarly, events such as birthdays and Christmas – when children get given money – are another great opportunity to help children learn about the importance of saving from an early age.

Read more at ‘Pop a savings account in your child’s stocking this Christmas.’

Get children to ‘earn’ money

Start giving your children pocket money as a ‘reward’ for doing chores, such as putting their toys away, unloading the dishwasher or cleaning the car.

You can then talk to your child about the idea of ‘earning’ money. This will help them begin to understand the relationship between work and finances – and that money doesn’t grow on trees.

Invest in a pocket money app

There are now a host of ‘pocket money apps’ – such as GoHenry, Osper, Nimbl and RoosterMoney – where you can make weekly or monthly transfers to your child, and set chores so your son or daughter can earn extra cash.

The aim of these apps is to help young people learn how to spend responsibly, and to start getting a grasp of the merits of saving – all within safe parental controls.

As a parent, you can manage the account and set spending limits. There are subscription costs, but the price is very reasonable given what’s on offer.

Get little ones involved in the household budget

While most of our bills are now online, if you still get paper ones, this is a good way to talk to your little ones about the different bills you have to pay, and how the family’s earnings are used to pay for these expenses.

This is also a useful opportunity to discuss the idea that there are ‘essentials’ that must be paid for. And that only once these outgoings have been covered, can money be spent on ‘luxuries.’

Top tips

  • When it comes to talking about money, the sooner you start, the better
  • Always talk openly about money
  • Teach children that spending decisions aren’t always easy
  • Try and keep the conversation light, rather than getting into a situation where children associate finance with money worries

* Research from adviser, Killik & Co


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