5 Ways to Talk to Your Children About Money
When should children learn about money?
Believe it or not, children can begin to build their attitudes and habits around money as early as five years old, and their view of money can be set by the age of seven. This makes it important to start building good money habits as early as possible.
Research shows that younger is better when it comes to learning about money. The earlier you introduce your children to financial concepts such as pocket money and saving, and the more you talk to them about money and give them responsibility for it, the better they will be at saving and planning for the future.
Starting early gives children experiences with money that will help them later in life. The more parents talk to their children about money topics like advertising, the better children become at making spending and saving choices.
Skills needed to manage money such as self-control also begin to form in the early years of life. By age seven, children’s attitudes about how valuable money is may be well-formed. At this age children are beginning to understand that the things they want cost money and can begin to understand the concept of delayed gratification and saving up for things, as well as beginning to determine the difference between needs and wants.
Here are a few tips to get you started talking with your children about money:
1. Pocket money gives children responsibility
Give children a sense of responsibility through things like pocket money. You can also give children responsibility for some money you already spend, for example on treats. This will help them in later life when it comes to handling money in the real world. How much they get isn’t important – what matters is that they can practise with their own money on a regular basis.
2. It’s never too late to start
Role playing games like playing shop with toy money, or talking to your children through how you decide which products to buy on a real shopping trip are ways to start the conversation with younger children.
It’s also never too late to start either. There are plenty of things you can do to help older children and teenagers learn about money too. You could talk to them about saving for long-term goals like a car, help them to open a bank account, or give them responsibility for their mobile phone credit.
3. Be confident
This is your opportunity to help your children develop positive, beneficial habits. Every parent can do little things to help their children, even if you aren’t the best with money.
Whatever you decide to do, whether it’s giving pocket money or setting up a savings account or money box, being confident and consistent will help.
4. Integrate money into your child’s life
You don’t have to have a formal discussion about finances to bring up the idea of good money management. Money is a very practical subject and children can be very hands-on learners.
Find ways for your children to handle and use money whenever possible, like making small purchases for the household on shopping trips, saving up for treats, taking responsibility for keeping their pocket money safe.
5. Make mistakes
Mistakes happen, but we can always learn from them, and that applies to money mishaps as well. It’s far better for children to make mistakes with smaller consequences than face bigger money issues when they are older. Talk to them about the choices they’ve made and what they’ve learned, and how that might change decisions they make in the future.
For more activities and ideas on how to talk to children of different ages about money, download the Talk, Learn, Do: Teaching your children about money guide from the Money Advice Service.
If you would like to talk about any of the issues in this article or need more general help with your finances, please get in touch with us.