Teach your kids a lesson - in money

Saturday 19 September 2015, 12:30 PM

Sam Barratt
Financial Journalist , Freelance

Whether you're sad to see them go back to school or relieved you don't have to keep them entertained all day, we all want the best for our kids. One way to help them secure a better future is to teach them some good money management habits.

Financial education is part of the national curriculum. Since September 2014, secondary school students in England have learnt about money topics such as credit, debt and insurance as part of their maths and citizenship lessons.

But, according to research by the Money Advice Service, leaving these lessons until secondary school could be too late. It found that many of our attitudes and habitual behaviours, including how we handle our finances, are shaped by the time we're seven, with our parents playing an important role in this development.

Luckily, helping your kids get to grips with finance needn't be tough and there are plenty of simple ways to help them understand money, even while they're still very little.

These are some money lessons you could consider - and, don't worry, some of them are fun:

  • Play with money - whether it's counting coins or playing shops, letting your child touch and handle cash from an early age will familiarise them with it and help them understand it's part of everyday life. Even a good, old-fashioned game of Monopoly can help them develop some sound money management skills, such as keeping some cash in reserve just in case they land on Mayfair.
  • Pocket money - giving a child pocket money on a regular basis is a great way to teach them good spending habits as well as concepts such as saving and budgeting. There are no hard and fast rules about how much you should give them, although the Halifax's annual survey found that the average was £6.20 a week in 2015 with 59% of kids expected to do chores to earn this money.
  • You may also want to adapt the way you give your kids pocket money as they grow up, shifting from weekly to fortnightly or even monthly allowances when they're in secondary school as this encourages them to budget.
  • Start a savings habit - opening a savings account and encouraging your son or daughter to pay in whenever they can is a great way to learn about putting money away for a rainy day as well as more complex concepts such as interest. Kids also benefit from some of the best interest rates around so they'll get to see their money grow.
  • Budgeting benefits -  understanding the benefits of shopping around and hunting out a bargain can give them money habits that will save them a huge amount of money throughout their life.
  • A great place to teach them these habits - and distract them from the chore of grocery shopping - is the supermarket. Smaller kids can be introduced to the idea by showing them how an item, for instance baked beans, can have different prices due to the brand or the size of the tin. Older kids can be set a challenge to save money by hunting out the best deals, letting them pocket any savings they make.
  • Talk money - even if they're not quite ready to get to grips with the complexities of mortgages and the reasons why you took out life assurance, kids are naturally curious and will probably want to explore everything from what your latest purchase cost to how much you earn. Talking to them in an age-appropriate but honest way will help them develop a mature attitude to money that will benefit them in the future.