5 tips for teaching kids about finance
Teaching kids about finance
Money can be a difficult subject in any situation as it’s often associated with headaches for various reasons from paying the mortgage, energy bills, council tax, to putting fuel in your car…. so it’s the last thing we want to talk to our kids about.
Our children learn all about English, Science, art and Maths but how much does algebra or calculating the area of a trapezium help for future day to day issues? At some point in their adult life they will have to make financial decisions, so giving them skills as a youngster will provide more opportunities.
There is a train of thought that suggests that talking about finance in a subtle way, in short bursts could break our little people in, in a gentle way, to the big wide world where taxes and bills are inevitable.
Here’s our top tips for giving your children a head start on understanding the fundamental aspects of finance, and although we’ve aimed our tips at pre-teens, you know your children better than anyone, our tips below should be age adapted for your little people:
- The importance of Pocket money. Providing pocket money, no matter what budget you have will provide the opportunity for them to make early financial decisions. They will have to make choices on what that money will buy them. Do they really want £5 worth of sweets that will be gone in 5 minutes or is that new xbox game or bike worth saving for?
- Let them make mistakes. Small mistakes now are miniature lessons for their future. Let them buy those frivolous small items in favour of saving up which means waiting longer to get what they want. Let them learn that lesson.
- Include them in your decisions. We’re not talking the big issues that give us headaches, but the simpler every day decisions we make without thinking too much. For instance bulk buying – supermarkets can be cheeky when pricing their bulk buy offers, just this week we saw an offer of 6 yoghurts for £3, but they were for sale individually for 50p each. There was no benefit in buying bulk other than they easier packaging. Ask your children to work out the savings of bulk buying options you come across. They may enjoy being part of the what-yoghurst-shall-we-buy-today decision and it can keep them busy instead of complaining to go home. Also finding a great deal for your bills can be exciting, recently we switched energy suppliers and will save over £500 a year. That’s not to be sniffed at all. So include your kids in the fun (make it fun!) let them see what you’re doing and how you’re doing it. This idea of finding cheaper options will do them well for their future.
- Be careful about oversharing. One thing as parents we can be guilty of is instilling our own fears and hard learnt lessons on our kids. Too many warnings can create fear, you don’t want them to fear finance, you want them to be confident that they can make the right decision for them. You may want to warn them about debt but should you have had your own problems, try not to instil fear by oversharing your own costly mistakes.
- Open a bank account. Physically take them in to a branch to open it up or make changes. Let them choose their own bank – what options to each banks provide. Let them take the money into the bank, and go in to withdraw so they can actually feel and see the money rather than seeing you make transfers for them. When they’re 11 they can have a bank card, at this point you really want them to have learnt some financial importance.
Above all Keep it short & simple – Don’t think you’ll get anywhere by sitting them down and lecturing them, you need to find opportunities in everyday life – because they are there if you look for them. Make it fun and enjoyable.
If nothing else, think of your own future – equip your kids to make your decisions when you’re retired and just don’t want to anymore.
Should you find yourself in debt, especially during the holidays, great advice is available from companies such as Creditfix who with discrete and professional staff can work with you to find the best way to manage your financial problems.