How did you learn about the value of money? Was it purely from following your parents’ example, did you learn about it at school or were you influenced by friends? With the introduction of financial education on the school curriculum, the benefits of teaching children about money from a young age has been brought to the fore.
New money management curriculum
Over the past few years, the national school curriculum has undergone a number of changes and from September 2014 children will be taught about financial education alongside other subjects such as Maths and English. Making this topic a staple part of children’s learning is to give them the basic knowledge they need early on, helping them to become more responsible with their finances.
Many children have to rely on their parents for their knowledge of the financial world, so there is naturally a huge variation in the depth of information that young people have. With the new curriculum, a basic standard will be taught across all schools, allowing children to have a more balanced outlook. There may even be the opportunity for parents to learn a thing or two as they help their children with homework!
Learning to manage money starts at home
Many parents may want to teach their children about the value of money, regardless of whether they study it at school or not. If they are shown how to spend and save their money by their parents, children may be able to relate to it more easily. Pocket money is a great way of teaching children how much money is worth. If you choose to give your child an allowance, try to keep the amount consistent each month and draw the line at what you will and won’t buy for them so that they know if there are certain things they would like, they will need to save up for it themselves. You may even want to put conditions on their pocket money, for example you may ask them to do chores around the house in order to earn their pocket money. Check out this pocket money saving guide created by Foresters Friendly Society for more ideas.
Do shopping and saving together
When you do the big supermarket shop, ask your child to come with you and help make a list of things to buy. If you set a budget beforehand, they will begin to understand how much things cost and how they can make the money go a little bit further. They can also get involved in comparing prices and form an understanding of why the same item can cost different amounts. Certain supermarkets now allow you to scan your shopping as you go so you can see how much you’re spending as you shop, rather than just when you get to the till. This may be a good way to show your children how each of the items on your list soon add up to a much larger bill.
You can also open a savings account for your child and encourage them to pay some of their pocket money into it. If you tell them that you’ll chip into the account as well, they may be encouraged to keep up with regular contributions themselves, especially when they see the amount going up.
Keep it real
If you are honest with them about money, your children are likely to have a better understanding and be more realistic about their own financial situation in the future. With evidence showing that adult money habits are set by the age of seven years old, the sooner you start teaching your child, the better the results will be in the long term.
Once your child understands that they need to save up for something, they will start to pay attention to what they spend their money on. They will also understand that they may have to wait before they can make a big purchase for something more special. This will then teach them that it may be smarter for them to save up so that they can have bigger treats.