School has finished but it doesn’t mean the learning has to stop there. As your children enjoy a blissful summer of no homework or bad school dinners, now is the best time to teach them financial lessons that will hopefully stick when they get older. Fostering basic money skills early in life will help them to become financially independent and establish good financial habits but be sensible and tailor each lesson to their age, after all they are kids not miniature adults.
Saving is fun
It’s important to teach your children that sometimes you have to wait to get what you want as it may not be possible to get it immediately. They can decide how much they want to save from their weekly allowance if they receive one or money from birthdays and other occasions. Get them started with a piggy bank that allows them to put money in more easily than it can be taken out. A good idea is to set saving challenges, to make it more fun for the kids and get them excited about the basics of saving. This will get them used to saving up for buying things they want. Talk to them and find out something they would like to save up for and work out how much they would need to save each week to reach their target amount.
Money doesn’t grow on trees
Many children grow up thinking their parents have an endless supply of money, they ask for something and it appears. A valuable lesson and not just for financial skills is to earn something you must work for it. You could help your little ones understand the rewards of hard work by setting up a list of chores around the house that they can do for which they will be rewarded for. Depending on their age it doesn’t have to be monetary, it could be a new toy or a trip to the cinema, and then as they get older you can slowly introduce money in to the rewards technique teaching them that money has to be earnt.
Learn to be a budgeting budgie
Encouraging your kids to budget doesn’t need to be complicated, it can be as simple as giving them a regular fixed amount of pocket money each week. It will teach them one of the basic principles of personal finance of living within your means and how to plan their spending. For example if you take them to the funfair this summer give them a fixed amount and tell them they can only go on as many rides or games that their money will buy. They won’t be able to go on all the rides and play all the games, so which ones are worth it? Let them decide. This will get your children to start thinking more strategically about what they spend their money on.
Debt is an IOU
Eventually your offspring may take out a loan at some point in their life, be it an overdraft, student loan or mortgage, so helping them understand debt is important. The concept of interest can be taught when they’re a little older in their teens. If they wish to buy something they don’t have enough money for, maybe an expensive game or toy agree to pay the remaining amount but ensure they understand that they now owe you that money. Tell them that they can give you a small amount from their allowance each week until they’ve paid back what they owed. This goes back to the idea that money doesn’t grow on trees and nor is it free so any money borrowed must be paid back.
These are just some of the basic money skills to teach your kids, that will hopefully get them prac The Money Advice Service has some great ideas and activities to help your children learn about money https://www.moneyadviceservice.org.uk/en/corporate/you-your-kids-and-money