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When To Talk To Kids About Money And How To Do It

by Author: Jade Lloyd
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#AD This post is a collaborative post written in partnership with PSECU.

If little Johnny is still in nappies, you might think, “Phew. At least I don’t have to talk to him about money for a while.” However, children begin learning financial habits at far earlier ages than many people think. When should you talk to your children about money matters? How can you do so in a meaningful way that makes a lasting impression? Depending on their age, certain activities can make your job easier.

1. The Toddler Years.

You probably don’t think toddlers think about money. It’s true — they don’t spend much time contemplating the national deficit. However, they begin forming their financial outlook — whether they associate money with abundance or with lack — while they’re learning to walk. It’s a scary thought. By the time children reach the age of seven, they’ve cemented much of their attitude towards money.

One fun activity to try. Give your toddler three piggy banks (plastic not ceramic!). You can colour-code them or label them.

  • The first piggy: This piggy represents fun money. Children can take money out of this bank to buy a chocolate bar or small toy whenever they like — but when the pennies run out, they run out.
  • The second piggy: This one represents short-term savings. Children save up for a year. At the end of that time, they withdraw their money for a coveted item like a game console.
  • The third piggy: Here is their long-term savings. For many children, they’ll empty this vessel to fund their university education. Savings like this will be hard for children to understand but as they get older, they start to understand the concept of bank accounts and the future.

2. Early Primary School.

These are the years when children start learning maths. What better opportunity do you have to instil respect for the value of a pound?

During this time, play ‘shops’ with your kids. Set up a fake storefront and stock the shelves with household items like pens and kitchen pans. Have family members ‘buy’ items using Monopoly money. This activity teaches children how to dole out the exact change and practice their customer service skills.

Reconsider how you treat pocket money as well. Many parents give their children an allowance each week. We have started to offer pocket money as a reward to our eight-year-old if he builds up enough good behaviour marbles in a week. Or, you can teach your kids that work leads to rewards by paying them a set fee for certain chores. They can earn 50p for putting the dishes away or £1 for hoovering there bedroom.

3. The Tweens.

By this time, your child’s long-term savings piggy is probably fit to burst. Take your child to the bank with you to open a savings account.

These years also offer the perfect time to teach about opportunity costs. Have your children write your weekly grocery list with you. Inform them how much you have to spend and let them select foods that meet their health needs while tasting great. Help them to estimate the amount each item will cost. When you get to the shop, assign them the responsibility of finding certain foods. Challenge them to come in under budget and let them spend the extra on a coveted treat.

4. Becoming a Teenager.

When your children reach their teen years, it’s time to instil adult financial habits. If your child doesn’t have a debit card linked to their account, allow them to get one now. Let them make mistakes — they should struggle after blowing their entire allowance on a game now rather than learn the lesson in adulthood when a splurge means literally going hungry.

Their short-term savings goals may morph into longer-term aspirations. Your 13-year-old might start saving for a car when they turn 16. Encourage this behaviour — and use the experience as a teachable moment to discuss insurance costs, maintenance, etc.

5. Spreading Their Wings.

Before your children head off to adulthood, take the time to discuss serious financial matters such as paying for college and buying a home. If you’re paying for their tuition, share copies of bills with them, so they understand the amount you’ve invested. When it comes to buying books, give them a sufficient sum, but provide them with the responsibility for making the purchase.

Now is a great time to discuss investing with your child. You can play the stock market game as a family to stimulate the way the market works. Share how you saved for their future and encourage them to do the same.

Teaching Your Kids About Money Throughout Life

Teaching your kids about money starts when they’re young. When you keep the dialogue open as your children grow, you instil sound financial habits that last a lifetime.

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