Money management is difficult at any age. Here are our top tips on giving children the knowledge they need to be confident in all things financial as an adult.
Money is a complicated subject; even as an adult. But the earlier you start the education process, the easier it will be for children to manage their finances and stick to an effective budget in their adult life. Here are our top tips for preparing your children.
Get them a bank account ASAP
Giving them the responsibility of their own bank account, with a bank card they can use to withdraw money and pay for goods, will give them the foundations they need to budget for themselves.
Give them a regular allowance
Pocket money is a great way of teaching children about restraint, and showing them that once your money is gone, it’s gone, until your next ‘allowance’ comes in.
Make them earn it
It seems obvious, but making children earn their money instead of just receiving it for nothing encourages a strong work ethic which will be priceless in their adult life.
Give them the chance to earn a ‘bonus’
Offering occasional additional chores to earn extra money is a great way of teaching them to go the extra mile.
Let them make their own mistakes
Be there to help them decide what they want to spend their money on, but make it clear the decision is ultimately theirs. Forcing them not to make a silly decision with their money, or bailing them out when they do, can cause more harm than good. After all, that’s not the way it works in the real world.
Don’t cut them off too soon
Although you shouldn’t bail them out, try not to be judgemental. We all make mistakes. Instead, explain to them why they made the wrong choice and what other options may have been more sensible.
Share your experiences
Tell them about times that you’ve made mistakes, and explain that that’s why you know better now. It’s important they know they’re not alone.
Share info on how much things really cost
It can be difficult for children to fathom the real value of money, so tell them how much everyday things cost. If they know that a week’s food shopping costs £100 or more, they may be more cautious when it comes to spending that £5 pocket money.
Teach them to shop local
We all need to shop at the Amazons of this world at some point, but for the little things, teach them the value of shopping locally and supporting small businesses - it's more important than ever right now.
Teach them how to spot a bargain
Show them how to compare prices online and when to expect sales on certain items. They need to know the importance of doing their homework, especially for big purchases.
Teach them to cook
It may seem like more of a life skill than a money management skill, but teaching your children to cook can save them big money in the long run. Show them how to make the most of the food they have left to cut down on waste and teach them to cook in batches for maximum cost efficiency.
Explain and demonstrate the importance of saving
Money management isn’t just about budgeting and spending money, it’s also about putting some away for a rainy day. Make sure they know how important it is to have an emergency fund, and explain the benefits of long-term and short-term saving. Help them set some goals to make it easier for them to stay focused.
Explain the importance of looking after their credit report
The state of our credit report determines everything in our financial futures, yet so many youngsters don’t even know what it is, let alone where to find it or how to look after it. Ensure your children know the Dos and Don’ts as soon as they’re old enough, and encourage them to check regularly.
Introduce apps to help
There are hundreds of money management apps out there that help with everything from setting a basic budget to investing your savings in the best place for you. Take advantage.
Even if you intend to teach them to budget and save so well that they never need to borrow, you should still explain the basic information such as the difference between secured and unsecured or how interest and charges work.
Keep them ahead of the fraud game
Fraud and identity theft attempts are getting more and more sophisticated. Explain how to protect yourself from it as well as possible. Tell them of common scams you’re aware of and make sure they know it’s better to be safe than sorry when it comes to giving out personal information.
Teach them to haggle
If you don’t ask, you don’t get, so give your children the confidence to ask for discounts and special deals where appropriate. It might save them a small fortune.
Teach them about tax
Tax affects everyone, so give your children the basics of how it works and where the breaks are if they’re entitled to them.
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