Educating the next generation about personal finance

Ten ideas for teaching your kids about money

1. Start ’em young. Children love toy cash registers and putting plastic fruit in mini-shopping baskets. You can also give them coins and let them pay for items themselves in the real shops – pick a place and time when it’s not too busy. 

2. There’s a wealth of online teaching resources including fun games such as from Topmarks here and Family Learning here

3. Take them with you to the supermarket and set them real-life problems to solve. See if they can work out what is the best value eg a tin of baked beans for 50 pence or five for £6.00?

4. Give them pocket money and let them decide how to spend it. They have to work out how to live within their means – this magazine or that sweet, not both. It’s hard but try not to make up any shortfall for them.

5. Alternatively they can earn their pocket money (or top it up) by doing chores. This helps instil the notion that money doesn’t just “arrive”, you have to work for it. A good app (and free in its basic version) is RoosterMoney which allows the child to monitor their own pocket money while adults can link chores to rewards.

6. Holiday money is a wonderful introduction to foreign exchange and is easily picked up by kids. Explain what a euro is worth compared to a pound or a US dollar. Ask what an ice-cream for US$3 (or three euros) would cost back home (and which is therefore cheaper)?

7. Open an account for them. Kids can control a savings account from age seven and a debit card from age 11. This is a great way to explore the topic of interest rates. Encourage them to deposit any Christmas and birthday money in the account and watch it pile up. You should also tell them that borrowing money incurs an interest rate too.

8. You could consider pre-paid cards such as GoHenry. They are controlled by both parent and child with an app. They are usually Mastercard or Visa so can be used in shops and online but there’s no overdraft so your child can’t rack up unsupervised purchases. They do however charge a fee for use.

9. [Older kids] Give them a monthly clothing/entertainment allowance to manage and pay them to do chores. This allowance could also include money for their mobile phone bill which might be a rude awakening for some teenagers. Encourage active participation in jobs such as baby-sitting or car-washing for friends and neighbours.

10. [Older kids] Run a fantasy share portfolio where the children can pick some companies and follow their share prices for a set period. Whoever has the companies with the largest increase in share price at the end of the competition wins ….

 

More stuff:

  • Compare pre-paid cards and kids’ accounts at Money Saving Expert here.
  • Find the best saving accounts for children at Which? 
  • If you want to invest for children, check out the SMM guide to Junior Isas here.

 

Last updated 22 January 2018.