Last week we looked at the rights and wrongs of taking money that belongs to your child. But if you want to make your child financially savvy, where do you start?
Here's some expert advice from Heidi Scrimgeour, mother of two and author at PlayPennies, a UK money-saving website for parents.
As parents, we all know that getting our finances in order is essential and many of us have learned that the hard way, thanks to the recession. But do we prioritise teaching our children about money?
Laying good financial foundations in our children's lives is arguably one of the best investments a parent can ever make. That doesn't mean setting up trust funds or saving for University fees – some of us just don't have that option these days – but by teaching our children how to handle money we can give them a fair chance of getting it right when it comes to their own finances in the future.
So here are three top tips for doing just that:
1. Show them the money!
Did your parents ever tell you that money doesn't grow on trees?! They were right, of course, but children don't see the world like that. And if they never get to see or spend money of their own they're not likely to develop an awareness of how much things cost. Letting a child, even one as young as three, work out how many sweets they can buy with a few pence is a simple but practical way of teaching them the basics of budgeting and getting them interested in how money works.
2. Put the fun back in funding!
Finances are a minefield of pressures but learning how to handle money can be fun too. Try playing shops at home with younger children – complete with real coins and items which can be 'purchased' – and consider letting older children get involved with planning a family budget. Give them a figure to be apportioned out for fun family activities like going to the cinema or having days out and put them in charge of the purse-strings! It's important to encourage children to see the positive side to money management and not just the pressure. Talk to them too, about how not buying non-essentials at the supermarket is part of ensuring there's enough money for your family holiday, so they learn that budgeting isn't just about you withholding the things they want, but about saving to pay for fun in the future.
3. Take some time to think about money
How we handle money is strongly influenced by our parents' attitudes towards their finances, so as parents it's worth taking some time to think about what attitudes you want to pass on to your children, and which of your own financial mistakes you'd like to help them avoid repeating. Does saving matter? Is giving to charity important? Is debt a bad idea? Take some to think about the money messages you want to pass on, and think up creative ways of doing that
You can find more money saving tips and special offers for families on the PlayPennies website