8 min read

Five steps to help teach children the value of money

One of the greatest life lessons a parent can pass on to their child is to teach them the true value of money.

Parents helping young daughter put coins into piggy bank
  1. Give your child a piggy bank
  2. Teach children basic maths early
  3. Open a bank or savings account
  4. Make them consider their financial goals
  5. Give them a helping hand towards independence

 

Although schools are now required to teach children financial literacy as part of the National Curriculum, this only takes place after the age of 11. By this stage children may have already picked up habits from their parents, both good and bad.

The way children view money will often carry through into adulthood, meaning it is important to give kids a good financial grounding from a young age.

Here are five ways to help your kids with their finances in childhood and early adulthood.

Give your child a piggy bank

A great way to start your child’s financial education is to give them a piggy bank, allowing them to start saving for themselves. At first this will probably be small amounts of pocket money, but in time this could teach them how to save money towards something they really want.

If they would like to buy a new toy, make them slowly save up over a number of weeks to instil financial discipline from an early age. OneFamily’s pocket money calculator is a fun, interactive way of getting children to budget, plan ahead and see how savings work.

Teach children basic maths early

Even before they start nursery or school, you can give your children a boost by showing them basic maths. By teaching your children some simple maths skills, such as addition and subtraction, you can give them an understanding of the subject before they start school.

You don’t have to be a mathematical whizz yourself, resources are available for free online for parents to help teach their children the basics.

Open a bank or savings account

Some banks and building societies will let children open an account from the age of seven. This can be a good way to show how saving in a bank can help your money grow, and teach children how interest accumulates.

Some accounts also offer debit cards or cash cards when your kids get a little older, meaning you can show your children that spending on plastic costs the same amount as in cash. Giving them this responsibility can be a good learning curve.

As they enter their teenage years and take on a paper round or other part time job, you could encourage your children to investigate savings accounts of their own.

You may have already opened a Junior ISA for them. If so, when your child turns 16 they’re legally allowed to take over the management of the account. They still can’t access the money until they’re 18 years old. But getting them to engage with their savings could be a good way to teach them about money management, interest and investments – depending on whether it’s a cash account or stocks and shares.

Make them consider their financial goals

While a young child is probably more concerned about buying their favourite toys, as your children get older it is wise to get them thinking about bigger financial goals, such as buying a first car or holiday.

There are also a variety of apps to help with everything from money management, to saving as you spend.

Give them a helping hand towards independence

As your children enter adulthood, they will start to think about leaving the family home. Whether that is in rented accommodation, university or buying for themselves, make them consider the costs of living alone.

As well as rent or mortgage payments, there are:

  • Household bills.
  • TV license.
  • Council tax.
  • Car tax.

Teach children and teenagers the basics to help them understand the true cost of independent life. You might decide to charge your young adult children rent, or ask they contribute to household bills.

Many young people also rely on parents to help fund the cost of a house deposit. While some parents are able to provide financial support, many cannot offer large gifts to their children. Parents who wish to give their children a financial boost should consider saving on their behalf from a young age.

Even a small amount, such as £20 a month can quickly add up, building a nest egg to pass on to your children in later life.

 

Written by Adam Williams – Financial Journalist

Note: Whilst we take care to ensure Talking Finance content is accurate at the time of publication, individual circumstances can differ so please don’t rely on it when making financial decisions. The opinions expressed within this blog are those of the author and not necessarily of OneFamily.