Having conversations about money at home builds children’s confidence in the subject and helps to develop their financial skills.
Children who are encouraged to talk about money, handle it regularly, and have responsibility for spending and saving tend to do better with money when they grow up.
The way children view money will often carry through into adulthood, so it’s important to give kids a good financial grounding from a young age.
Why is it important to teach children about money?
Young children are like sponges and will absorb what you teach them and take it into adulthood.
Take some time to think of your own money habits:Teaching children about money will help make their future more secure. So the sooner you start developing their financial skills, the sooner they can start to hone those skills.
Discuss what money is and how spending works.
Talking to kids about money, and more specifically, having positive conversations about money with your children from an early age, is probably the most important thing you can do as a parent when it comes to instilling good attitudes towards money.
As pocket money is most children’s first introduction to money, it’s the perfect way to start introducing some of those basic money principle like saving, spending and sharing. The key things to consider, beyond just how much to give, are what conditions you’re going to attach to the money, if and how they’re going to earn it, and being strong enough to say ‘when it’s gone it’s gone’. If you’ve decided to start a pocket money routine, but aren’t quite sure where to start you can check out our top tips on starting a pocket money routine that will help teach kids the value of the money.
Set a savings goal.
To a kid, being told to save—without explaining why—may seem pointless. Helping children define a savings goal can be a better way to get them motivated. If they know what it is they want to save for, help them break down their goals into manageable bites. For example, if they want to buy a £50 video game and they get a £10 allowance each week, help them figure out how long it will take to reach that goal, based on their savings rate.
Give them an opportunity to budget their cash.
If you give your child a regular allowance, encourage them to be careful not to run out of cash before the next allowance day comes along. If you take a vacation with your child, consider giving them a fixed amount of money for small purchases such as souvenirs and snacks for the duration of the trip.
If you don’t have much to set aside for a child’s allowance or vacation allocation, don’t fret.
Be a financial example for your kids.
Just like most things, your children will learn from your example. It’s important to understand your own finances, set financial goals and plan for the future. However, it can be challenging to talk to your kids about finances if you feel you can use some help with that topic yourself. ATB Wealth offers resources to help you reach your financial goals, check out our Wealth Good Advice page here.
The more you educate yourself, the better you can teach your kids. Not only will it give you peace of mind knowing your children are capable of making smart financial choices, it also helps promote and build financial literacy for the next generation.