Day-to-day activities are an effective way to teach your children to be financially savvy, and learning these skills at a young age will set them on a lifelong path to financial wellbeing.
From a young age, children are exposed to marketing messages telling them to want more, buy more and spend more, inculcating a habit of instant gratification and impulse buying. In the same way, though, children can be taught good money habits.
According to research done by Cambridge University and the UK’s Money Advice Service, children as young as three can grasp financial concepts such as saving and spending. Furthermore, kids’ money habits are typically formed by age seven.
‘Whenever I meet people whose finances are in good order, they invariably tell me it was due to lessons their parents taught them,’ says Maya Fisher-French, financial journalist and author of Maya on Money: Implement your Money Plan.
‘As young children they remember being warned against debt and taught about the virtues of saving. They worked for their pocket money and their parents taught them about budgeting and saving towards a goal rather than just handing them cash on a whim.’
How can parents raise their children to be money-wise?
1. Compare prices
‘Take your children grocery shopping and teach them how to calculate relative pricing, says Fisher-French. ‘Let them work out which brand of tinned tomatoes or toilet paper offers the best value. My 10-year-old has learned how to do price comparisons before spending, and the idea of shopping around means he doesn’t buy the first toy he sees.’
2. Set a goal
This is the perfect way to teach children about saving. You won’t interest them if you talk about saving for retirement, but if they have a specific experience or toy in mind, then the lesson hits home. Once your children have decided what they want, research how much it will cost and encourage them to save for it.
3. Teach children about the value of money
By giving children their own spending money you are helping them learn and understand the value of money. Pocket money, linked to chores around the house, is a great way to do this. By rewarding hard work you’re helping to instil a good work ethic and teaching them that money really doesn’t grow on trees. ‘Plus, it’s a great way to get the dog walked and the car washed,’ adds Fisher-French.