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We want our kids to learn how to read early. We want them to learn how to be social early. We even want them to learn how to ride a bike early.
So why don't we feel the same way when it comes to learning about money?
No matter what age you are, financial matters, no matter how big or small, can seem like a confounding labyrinth if you don't have any experience with them. And getting that experience early on in life with dealing with money, even in the most basic of terms, can really make the difference in terms of financial stability later on in life. Speaking on why teaching children how to handle money from a young age is so beneficial, Salman Haqqi, personal finance expert from money.co.uk, states:
“Creating an environment in which you are able to speak more openly with your children about your financial decisions is vital for engaging them from a young age on the value of money. Showing them how to make choices when shopping for Christmas presents and what they can do to save the money they may receive as gifts, will set up good managing habits. A healthy relationship with finances starts at a young age, and children learn most of their habits from their parents.”
But if you're still unsure on where to start when it comes to showing your kids the importance of financial responsibility, the financial experts from money.co.uk have compiled a list of their top six tips for teaching your children about money...
1) Set a good example with your own finances.
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Simply put, children learn money habits from their parents. Showing them small activities such as checking the receipt after your shop or putting money into savings can start developing positive habits from a young age that will last a lifetime.
Encourage your child to ask questions without repercussions. While you might not necessarily have all the answers (and that's totally okay), opening up a dialogue is a healthy way for your child to learn more about finance.
2) Use pocket money to teach children how to save.
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Any pocket money earned through household chores (or even birthday or holiday money) can present a great opportunity to show children how to save. This can be anything from setting them up with an old fashioned piggy bank where they can "deposit" their earnings, or giving them a chart to fill out so they can track how much money they receive or spend periodically (e.g. weekly, monthly etc.).
3) Use trips to the shop to learn about saving vs. spending.
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Another practical way to teach a child about the benefits of saving is simply by shopping with them. Allow them full control of their own money on the understanding that if they don’t have enough they won’t be able to borrow any more. The more they feel in control of their own finances, the more they will be able to make smart decisions when it comes to spending or saving.
4) Speak openly about small financial decisions.
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Start involving your child with minor family financial decisions, such as deciding which brands and items to buy when shopping and opting for products that will last a long time. This way your child will be able to understand the decisions you make while also feeling in control of certain financial choices they make. Even having them help out with coupon cutting can be a fun way to get them into that habit!
Older children could also help with budgeting while shopping, such as having them keep a running total of the items you buy. Not only will this help their maths skills, but it can also help them to understand how small items can still add up in price, demonstrating that not everything is affordable on a budget.
5) Reward them by learning about interest.
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Paying small amounts of interest on the money your child has saved is a helpful way to encourage them to keep saving. Saving begets saving, and children will be excited to learn that the interest they earned last week can be used to earn more interest if they save until next week!
6) Use digital tools with older children.
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There are a whole range of online tools for teaching older children about online banking and using cards for both saving and payments. For a small monthly subscription, certain apps allow parents to set strict spending limits, monitor what their kids are buying, and where they are spending their money.
Hmmm...maybe some of us adults should use these too, right?
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Money.co.uk is one of the UK’s leading comparison websites for financial services. With the shared goal to help people make sense of their money, we support consumers with finding mortgages, loans, credit cards, bank accounts and insurance from more than 600 providers.
Our free, online comparison service allows UK consumers to compare thousands of financial products. From credit cards to savings accounts, loans to travel money, we want our users to feel reassured that we're on their side when it comes to their finances.