It’s never too early to start preparing your child to be financially independent, so we’ve put together this handy guide to make teaching money skills simpler.
Financial savviness is an essential life skill required to make effective money management decisions. With minimal focus on financial management in the national curriculum, responsibility generally lies with parents to teach children how to spend money wisely.
But how could we begin to teach our children these skills from an early age? To make teaching financial sense a little easier, we’ve created this handy guide of 14 ways to help prepare your child to manage their own money in the future.
When they’re at preschool
Teaching toddlers and young children about money may seem like a fairly impossible task, but there are actually many ways you might instil a sense of financial awareness into your little one from a very young age.
Don’t just say no. When saying no to buying them something or taking them somewhere they want to go, make sure to explain your reasoning behind this in financial terms. If your child asks for a toy when out shopping, rather than just saying “no”, you could encourage future thinking by saying, “we can’t buy that toy today because we need to save our money for our family trip to the zoo next week”, for example.
Introduce money boxes. Using clear jars is a particularly effective way for little ones to see their coins building up into what looks like a lot of money. If they see something they want in a shop, you could start rewarding them with small change for their money pot each time they help you or behave well. This could encourage them to save up and watch their money grow until they have enough to buy the things they want themselves.
Reward good work. To teach your child the value of earning from a young age, you could reward their good behaviour or hard work with treats. If they have helped you with something, demonstrated kindness or been particularly polite that day, why not reward them by letting them watch their favourite programme for a little longer in the evening? But if your youngster has misbehaved, explaining the reason they can’t have extra TV time makes them aware of how they must behave in order to be rewarded in the future.
Teach them to give from a young age. Rather than just saving for things for themselves, you could remind your toddler or child when there is an upcoming birthday in the family, and allow them to choose the present they want to get them. Although it is unlikely they’ll be able to buy this themselves, asking them to contribute some of their money ensures they experience the enjoyment of giving someone a gift that they have personally chosen and paid towards, and make them more likely to do this when they’re older.
When they’re at school
At school age, there are various new ways you could develop your child’s attitude towards money. As they begin to learn maths at school, increasing their awareness of pricing and value could help them put new skills to the test, too.
Let them earn it. You could encourage your child to do small jobs around the house to earn cash, making them appreciate that costly things must be worked for. By giving your child some money each time they help out or do their chores, this could enable them to build up some money to spend on items of their choice when you are next at the shops.
Give them responsibility. Managing their own money might also provide them with a real sense of responsibility, as they might learn from their own spending mistakes. For example, your child could soon realise that if they had saved for a little longer, they could have purchased a better toy or a much bigger bag of sweets.
Allow them to pay. You may risk annoying busy cashiers, but allowing your child to count out the correct money to pay when you are in a shop could really help them to visualise how payments work while increasing their awareness of what things cost from an early age.
Lead by example. During their school years, children are particularly attuned to what those around them are doing, so dealing with money in front of them could set a strong example for when they are handling their own finances. For example, if you purchase something new, you could show your child, tell them your reasons for buying it and explain how you saved the money for it.
Additionally, your own attitude towards money is likely to influence your child’s relationship with their finances when they are older. If your child sees you purchasing a hot drink for a homeless person, for example, this is likely to stay in their mind in years to come, meaning they are likely to attach significance to giving and supporting others as well as buying things for themselves.
Teach them to shop skillfully. To help your child learn about value when it comes to purchasing items, you could ask them to help find items on your shopping list at the supermarket. Encourage them to find the best value options based on the price, size and brand of a product, as this could help them learn what constitutes a good price and to think methodically when they have to shop for themselves in the future.
When they’re teenagers
No longer a child but not quite an adult, when your child hits their teenage years it is a great time to get them started on their path to using money in the real world. It is now time to start thinking about the future and their ambitions, so it could be wise to encourage them to spend and save their money with their broader goals in mind.
Help them open a bank account. Probably one of the first and most useful things your child could do with when becoming a teenager is a bank account with a debit card. Many high-street banks offer children’s accounts for ages 11-17, and having a bank account could be a great way for your child to make savings and start to manage their own finances. They might also need a bank account to be paid into if they get a part-time job.
Find them a paper round. At the age of 13, you could encourage your child to get an evening or weekend paper round. This could help them become more financially independent, as making their own pocket money means they could budget for going out with friends or buying their own things.
When they’re almost adults
Once a child has left compulsory education at the age of 16, whether they choose to go to sixth form, college or begin an apprenticeship, they’re able to do far more independently. Helping your child out with their finances at this stage of their life is crucial when it comes to making decisions about their future.
Help them get a part time job. At the age of 16, children can legally apply for a wider range of part-time jobs to earn money while they study. Part-time jobs could be anything from working in a hair salon or a shop to serving food in a restaurant. Again, earning their own money could make them feel a greater sense of freedom when it comes to going out with friends, socialising and shopping, and might teach them to start budgeting effectively so that they could do these things.
Meet them halfway. If your child is learning to drive, why not encourage them to save for their car, and reward their saving by putting some money towards it too? Encouraging them to save for bigger things could really help when they are looking to save for new cars, holidays or a house later on.
Prepare for the future. If your child is going to university, teaching them the dangers of debt and credit cards could really help them stay out of financial difficulty. Instead, you could discuss their options when it comes to paying for tuition fees, rent and living costs at university – such as student loans, small fee-free overdrafts, getting a part-time job and budgeting effectively.
By increasing your child’s financial awareness during their childhood and teenage years, you could help prepare them for the real world of earning, spending and saving in their adulthood and beyond.
Financially protect your family with Beagle Street
When thinking about your children’s future, we know how important it is to plan ahead. Once your child is 18, they could think about getting their own cover.