We all know how important it is to handle money well. It’s one of those essential life skills that we all need. But when it comes to teaching kids about money, where do you start? It can be daunting to decide what age to start your child’s financial education, let alone what you need to cover.
Well, we asked the parents at CAP’s head office to share their favourite strategies for teaching kids about money management. Here’s what they had to say about making sure their own children are prepared for the future.
1. Encourage a healthy attitude towards money
There are lots of practical lessons to learn about money, and we’ll cover those too, but a great place to start is to encourage children to have a healthy attitude towards money.
‘We’ve been teaching our four about money from their earliest days (our eldest is now seven). So far we’ve tried to show them what money is (i.e. a tool), what it’s for (i.e. it serves a purpose, it’s not something to acquire for its own sake) and that it’s important to be in control of it — rather than be controlled by it.’ — James Ross, Specialist Debt Advisor
2. Let them see how you plan your finances
Kids learn by watching and copying their parents, so why not show them what you already do? If you have a budget written up somewhere, or use an app to keep track of your finances, let your children see that you’re putting time and effort into managing your money. They’re likely to remember that when making their own decisions in the future.
‘We showed our children (13 and 7) our budgeting spreadsheets to explain how we count up our income and work out things like regular spending and savings, using some of the money coaching principles.’ — Paul Walmsley, Energy Relationship Manager
3. Talk to them about budgeting
Sometimes it’s important for us to be reminded that it’s OK not to be able to buy our kids everything they want. It can even be an important learning opportunity for them. So don’t be afraid to talk about budgets, and the fact that money is a finite resource to be used wisely.
‘I involved my daughters in talks about money from about 10/11. As a single parent, I needed them to understand that if I couldn’t afford it, then throwing a strop wasn’t going to change things! We talked budgets and savings, and they had pocket money to decide what to do with. They now both have mortgages, and my eldest now has a daughter of her own, so managing her budget to cover everything they need, including nursery fees, has been a bit easier as she’s used to it.’ — Helen Ganney, Team Manager
4. Let them practise handling their own money with an app
When we asked our staff what they did to give their kids some money skills, one thing that got mentioned a lot was the GoHenry app. Here’s what parents said about it:
‘We opened a Go Henry account initially for our daughter at 10/11. It’s a loaded up debit card which got her used to keeping an eye on her pocket money, deciding what to spend it on and also using pin numbers/bank machines etc. She’s moved onto a junior bank account now that she’s nearly 15 but the transition was smooth because of the training period!’ — Alice Smith, Head of Mission
‘I also use GoHenry with my kids. I have it set up that they get a fixed amount each week. They can then give to charity and set up saving on there. It’s a great way of teaching them to budget and manage their money well. My son is learning to check what money he has on the app before buying something with the bank card. He can also see quickly and easily how much he has saved up. As a parent you can set up spending limits on it and you get a notification every time they spend money which is really helpful too.’ — Charis Scott, Scotland Promotion and Engagement Manager
5. Help them learn to save up for the things they really want
As it gets easier and easier to ‘buy now, pay later’, one really useful skill to teach our kids is how and why to save up their money.
‘We have involved our lad in money conversations from a young age. When he wanted to buy a particular toy, and we thought it ‘cheap and tatty’ we would discuss whether it was worth it. Then agree to wait a couple of weeks, save his pocket money and buy a better version of it. He got a better toy, and learned the value/reward of money and saving. At 15 years old now, and up every morning for his paper round, he does this for himself and assesses what he wants, how best to buy it and shopping for best deals. Oh yes, he also has more savings than me too!’ — Steve Camps, Senior Debt Advisor
6. Pocket money can be a useful tool
If your family does pocket money, this can be a great way to practise those saving principles mentioned in the last point.
‘We have a 9 year old and have done pocket money for two or three years. It really helped with the asking for things because the standard reply is, “yes, you can save for it with your pocket money”. Having pocket money teaches her so much like the value of money and that if you are patient, you can save for what you want or by then realise you didn’t want it so much and get something else.’ — Nathan Davies, Debt Advisor
7. Give them some responsibility to choose how money gets spent
Finally, don’t underestimate the power of giving kids a bit of (age-appropriate) responsibility. If they’re old enough to understand budgeting, why not put them in charge of deciding what to buy for dinner this weekend, or for a day out with the family?
‘Involving my boys in key decisions has always been a priority for us, for example, when on holiday we would always talk openly about our holiday budget and make it clear this is a finite amount, we would then allocate each boy a ‘decision day’ and they could decide on what to spend the money on such as going out for a meal or doing an activity.’ — Simon Willett, RDI Project Manager
So there you have it: seven ideas for teaching kids about money so that they grow up equipped and confident to manage their finances. Have you tried any of these strategies with your own children? Do you remember what your own parents taught you about money? Let us know what has worked well for you.