Five ways to teach your kids the value of money
To mark the start of the 11th annual My Money Week, Richard Stone, chief executive of investment platform, The Share Centre, offers some tips on how you can empower your children to make decisions about money and saving.
- Talk about it! We are all naturally reserved when talking about money, but with children it is important. Talk about the reason you go to work, what earning money means and what different things cost. Talk about how much things cost relative to each other and ask your children whether they think that’s right.
- Use cash. One of the biggest challenges today is money is intangible. We all use our debit or credit cards and pay with contactless cards. Using cash is tangible and shows children what money “is”. You can even go one step further and allow them pay using cash. This helps with maths, adding up the price of things and working out what change they might be due.
- Encourage them to earn a bit of money by doing odd jobs. Again, this helps to show the value of money and the concept of earning and work. If you pay them in cash, you could then even allow them to spend that cash or perhaps take some of it to a bank or building society and put it into a savings account for them. For older children you can have more detailed conversations about savings, interest rates and even investing. The idea they could own a little bit of Tesco or Sainsbury’s makes for an interesting conversation when out shopping in those retailers.
- Show them other ‘money’. If you are on holiday overseas make sure you get some local currency. Explain that not every country uses the same money. Talk about the pictures on the notes – they may well depict the head of state, for example, or places of interest. Talk about the exchange rate and work out whether familiar things cost the same e.g. a favourite chocolate bar or can of drink.
- Lead by example. Children learn by example, so the best way to teach your child about saving money is to save money yourself. Have your own jar of money you put coins in regularly. You can also show your children how their Junior ISA or Child Trust Fund (CTF) has grown in value over a period of time relative to what you have contributed on their behalf.