Five top tips to make your kids money savvy
Money and finance can seem overwhelming for many people, but for children and teenagers, it can feel like a bigger challenge.
But according to Rose St Louis, a savings expert at Zurich UK, teaching children about finances from an early age can put them in good stead for the future.
These are her top tips for getting your children stuck into finances early on – and you may be able to apply them to your own finances too:
1) Encourage saving from an early age
It’s never too early to begin saving, no matter how old your child is. Encouraging them to engage with their finances from a young age will prepare them for when they eventually become financially independent. It’s important for children to understand that just because you have money, it does not mean it needs to be spent all at once. Why not open up an ISA for your children and allow the magic of compound interest to put their pocket money to work?
2) Practice budgeting
Building a budget encourages your child to take a close look at their spending habits. This could be introduced light heartedly from an early age. When you go food shopping for example, why not give them a set amount of money to see what they can buy on a budget. This will allow them to develop a better understanding of value and is good practice for when they leave home, get a job or go to university.
3) Teach them to be credit wise
Although credit card borrowing fell earlier this year, borrowing is still high, particularly as there are so many options on the market. As such, teach your children early on about borrowing money. One way of doing this is by lending your children an amount of money and agreeing the interest rate that they need to pay back each month. You can then save the money developing them a little nest egg and give it to them once they have paid it all back.
4) Decode the financial jargon
With so many different offers on the market, it can be difficult to cut through the financial ‘jargon’ and make sense of what’s best for managing your money. Not understanding the meaning of terms such as APR on a credit card or interest repayments on an overdraft can really impact their financial futures. Thankfully, there are lots of resources to help from an early age, including online guides from charity Personal Finance Education Group who runs My Money Week.
5) Make them work for it
Letting children earn a little bit of extra pocket money by doing chores around the house has always been a good way of teaching them the value of hard work. It also has the added benefit of giving them the responsibility of earning money and saving from a young age. If children work for their money doing chores, even if it is just a few pounds here and there, they can develop a better appreciation that money is earned, not just given to them.
Related: See YourMoney.com’s How to have the ‘savings talk’ with your children and Cut through the jargon with our credit card glossary for more information.