Playing ‘shops’ and when to give pocket money… how to give your kids a financial lesson that will set them up for life
LESSONS in money should start at home.
Nine in ten children aged seven to 17 say they would go to their parents if they needed money advice, according to Money and Pensions Service, but only a quarter have learnt cash management skills at home.
Charlotte Churchill, from the MAPS young people’s team, says: “Parents and carers have the most important influence on how children deal with money in adult life.”
“It’s never too early. Children’s attitudes, skills and habits develop between three and seven years old, so once you are talking to children, you can talk to them about money.
“It’s also never too late — so don’t feel guilty, you are almost certainly teaching money skills more than you think you are.”
Here Mel Hunter shows how a successful financial education at home adds up.
WHAT ARE KIDS TAUGHT IN SCHOOLS?
DESPITE Money Saving Expert Martin Lewis funding his own Your Money Matters textbook and his victory in making it a compulsory part of schooling, financial education remains patchy.
Education rules for schools depend on where you live.
In England, children get some lessons in budgeting, credit and debt, pensions and insurance when they get to secondary school.
But primary schools are not legally required to offer financial education.
In Wales, some personal finance matters are taught in primary and secondary levels — but experts say more could be done to support students.
Louise Hill, co-founder and CEO of kids’ money app GoHenry, says: “If financial education was compulsory in all schools nationwide from primary school age — something we have long campaigned for — it would make a huge difference to the next generation and set them up for success, not least by equipping them with the practical money skills they need for adulthood.”
WE STARTED WITH BEDTIME STORIES
WHEN his daughters Imogen, 12, and Florence, ten, were younger, Will Rainey would add a little twist to his bedtime stories.
“I’d put a money spin on a kids’ story,” says the former investment consultant from Warlingham, Surrey.
“I’d talk to them about money being like seeds and how you can either give the seeds away or you can plant them and they will grow over time into trees.
“They could understand that I was talking about spending and saving.”
Will, 43 — who runs family finance website bluetreesavings.com and is author of Grandpa’s Fortune Fables — Fun Stories To Teach Kids About Money — says he and human resources manager wife Astrid, also 43, have always discussed finances openly with the girls.
“We talk about what we do and don’t spend our money on, and how what works for our family may not be the same as another family.”
Charlotte says that talking is the cornerstone of teaching the subject at home. “Think of all the money decisions that we, as adults, make in our heads.
“When we are thinking ‘Do I need it or just want it? What do I need to go without to have it?’, we should to be saying this out loud in front of our kids.
“The numeracy behind money is vital, but so are the emotions.
“If you’re struggling to pay your bills, it’s OK to explain to children that you don’t have the money to buy something they want.”
TEACH NEEDS vs WANTS
JULIETTE COLLIER from the Campaign For Learning, says: “If you’re in a shop and your child wants a new toy, instead of saying ‘No’, say ‘Let’s take a photo of it and remember it when it’s your birthday’. Unless children know they can’t have everything they want, when they want it, they may face problems as adults when they are able to buy things on credit.”
Once children begin to understand the difference between wants and needs, usually when they’re six or seven, you can talk to them about earning and saving.
SAVINGS HABITS
THIS is what Will has passed on to his daughters.
“Every time they get some money, we encourage them to save. They can have fun with £9 out of £10, but saving that £1 is a great habit to get into and it will grow as they get older.
“As parents you can invest it for them, and the more they see it grow, the more excited they get.”
When it comes to pocket money, there is no right amount.
It just depends what you can afford, says Juliette.
“Even giving children very small amounts gives them the chance to save, budget and make mistakes which they can learn from.”
Will increases the girls’ pocket money as they get older, gradually making them pay for more things themselves as the money goes up.
He says: “They know what they’re expected to pay for — toys, for example — and they enjoy that freedom.”
MAKE MONEY VISIBLE
WITH banking and bill-paying mainly done online, children don’t see real money that much.
Juliette says: “It’s almost invisible so they may not even realise that you have to pay for your water or heating, as it is taken by direct debit.”
The same applies to contactless payments.
Charlotte says: “Do they realise that card you’re tapping is connected to your bank? Do they know how the money gets into your bank? Talk to them about it, so that when they get their own card they understand how it works.”
Children as young as six can now have their own contactless debit card connected to apps such as GoHenry, HyperJar, Starling and NatWest Rooster Money.
The cards — some free, others paid for — can help kids save and parents can reward them for completing chores.
Research suggests that technology is helpful when it comes to teaching children about money, as is education at school.
But no app or classroom can replace real-world lessons from families.
‘OUR POOR CHILDREN’
HUSBAND and wife Jo and Ryan White are passionate about teaching their kids about money.
Jo, 45, says: “If my children ask for a new toy, I ask them if they want or need it.
“Then we sleep on it and, if they still want it as much, they come up with a creative plan to get the money together, from making things to selling popcorn.
“Once they’ve made that money themselves, they often don’t want to fritter it away after all.”
Jo set up a successful dog walking and pet sitting business – We Love Pets (welovepets.care), which has branches nationwide.
She takes Freya, seven, and William, six, to learn from the franchisees.
“Life is like business – you need to have more money coming in than going out, ” she says. The children don’t get pocket money from Jo, or Ryan, 41, but are expected to muck in with chores around the family’s home in the Norfolk Broads.
They can earn extra doing things like giving the car a thorough clean.
They now have online bank accounts and debit cards with Revolut.
“To make them realise that the card isn’t magic money, we show them how their money is going down on the app as they spend it,” Jo says.
William has saved around £500, while Freya – more of a spender – has £200 in the bank.
“We talk about the emotions around money. It’s so easy to think ‘Oh I want that lovely, shiny new thing’ but they’re learning to be patient and make the right choice.”
SKILLS FOR DIFFERENT AGED KIDS
3 AND 4 YEAR OLDS
GET them to help you write a shopping list, with columns for things you need and things you want.
Have a collection of coins so they get used to the feel of money.
5 AND 6 YEAR OLDS
GIVE them a moneybox to start saving.
Play shops together.
7 AND 8 YEAR OLDS
START paying them for chores or give them pocket money, however small.
Get them to help you compare prices in shops.
Divide their money between three jars – for spending, saving and giving to charity.
9 TO 12 YEAR OLDS
TALK about mobile phone costs, contracts and credit limits.
Give them a savings challenge and help plan how they will achieve it.
TEENAGERS
HELP them manage their first earnings.
Talk to them about your income and how you budget.
Try not to bail them out if they overspend.
- See moneyhelper.org.uk for more tips.