The first experiences children have with money can shape their financial behavior as adults, according to a study published by the UK government’s MoneyHelper service. By the age of seven, according to the Cambridge University study, most children are able to grasp the value of money, delay gratification, and understand that certain choices are irreversible or will cause them harm. problems in the future. Research suggests that children empowered to make age-appropriate financial decisions and faced with dilemmas about spending or saving may form positive “mental habits” about money. This could lead to continuous improvement in their ability to plan ahead and think through their thinking about money, or they may learn to regulate their impulses and emotions in a way that promotes positive financial behavior later. in life.
Juliette Collier, national director of the Campaign for Learning charity, says it’s worth giving kids as young as three or four their own pieces to handle, spend and save. “Once they’re big enough not to put it in their mouths, then give them some money,” she says. “If, for example, they end up wanting to spend that money on candy, then make it clear that they can’t spend the money on anything else. Let them make choices and suffer the consequences.
There are many free resources you can use to teach young children about money at home. Valuesmoneyandme.co.uk, a website created by credit reference agency Experian, offers free online books and interactive quizzes for school-aged children that explore interesting ethical questions about money and dilemmas. real-world financials. FunKidsLive.com hosts a cash-strapped podcast aimed at kids, and there are many free games available online (see topmarks.co.uk/maths-games/5-7-years/money or natwest.mymoneysense.com) . If board games are your thing, Orchard Toys’ Money Match Cafe or Pop to the Shops are educational and imaginative, while Cheeky Monkeys subtly provides helpful financial lessons on the consequences of greed and risk-taking.
Finally, don’t underestimate the value of playing games like “going to the stores” at home with real coins. Make sure you set a budget.
Discuss the purpose of money
Collier suggests taking pictures of different items in your home that can then be categorized into necessities and luxuries, triggering a discussion about the usefulness of money.
She also recommends talking about costs that may be hidden – like heating, electricity, and water not being free – and involving children in attempts to save money. For example, you can challenge them to help you make a “no spend” day or make a recipe from the Love Food website, Hate Waste, using only the ingredients you have in the cupboard.
You can use these activities as a springboard to discuss how adults should prioritize what they spend money on and how difficult it can be if you feel tempted to buy something you can’t afford. to allow.
The Child Poverty Action Group charity suggests that you ask your child to imagine a child the same age as them and talk to them about what that child might be missing if their family doesn’t have the money. Its spokesperson, Kate Anstey, said: “Talking about poverty to children can help raise awareness and understand poverty and inequality. It may seem like a difficult subject to broach, but teachers who talk about poverty in their classrooms find that children cope very well.
Go to stores
One of the best places to teach kids about money is a store. “Being able to handle money and buy something yourself is very special – it builds your confidence with money,” says Dr Ems Lord, director of the NRICH math project at Cambridge University. .
If you’re paying with a contactless card, explain how it works – that even if you don’t use coins, the money still comes out of your bank account – and discuss what groceries you buy. Why might you choose to spend more on Fairtrade chocolate or free-range eggs? Are more expensive products always of better quality? Ask if they would like to do a blind taste test at home to see if they can tell the difference between different price brands. Is it worth the price difference?
Be on the lookout for BOGOF (Buy One, Get One Free) and complicated discounts. Teach children to compare different offers. “It’s absolutely critical that we teach kids about money in context,” says Lord, a former math teacher. “Encouraging children to calculate the cost of purchases and compare offers so that they understand the value of goods is an essential life skill. “
Helping your kids master guessing is also very important, she says. “It helps kids develop a real sense of numbers so they can easily spot when they’re overcharged and avoid costly mistakes. “
Make sense of your child’s investments
Open a Junior Isa for your child and buy a few stocks in a supermarket or restaurant chain that you frequent with him regularly, suggests John Lee, the author of Yummi Yoghurt, an investing book for teens. That way, when you get there, you can explain to your child that you both have a ‘vested interest’ in supporting this business and that hopefully you will someday get a reward, in the form of a dividend, if the company is doing well.
You can also talk to them about how you choose other funds for their ISAs and what impact you hope these investments might have on society or the environment. “The important thing is to involve your child and let them know about the companies in which you buy shares,” says Lee.
Take them to a charity shop
Charity shops are particularly good places to take a small child to spend their weekly pocket money. They often find a great deal and you can take the opportunity to discuss the power of their book – how it feels to them to know that they are supporting a great cause and that they are getting something for them. themselves?
Point out the positive environmental impact of second-hand shopping, and once you get home, find out how much the item would have cost new and talk to them about how many extra weeks it would have taken to save.
Ask them why they think people donate to charity stores and if they would like to donate with their old toys: How much will these toys be worth to the charity? What difference could their donation make in someone’s life?