The most valuable advice you should pass on to your children before the age of 10
Teaching children about money when they’re young will help them to manage it better when they’re older – but parents are struggling to pass on financial lessons to their kids. A study for the government’s Money And Pensions Service shows that children form money attitudes before they are 10-years-old. By the age of three, they can develop basic money concepts and by age seven many of their money habits, including the ability to plan and delay gratification, are already set (Picture: Getty Images)
A recent survey from Yorkshire Building Society shows that more than nine in 10 parents of school-age children think it is important for their kids to experience financial education, yet only a quarter talk to them about the subject once a week or more. ‘Parents recognise that financial education is incredibly important, but they are juggling many different priorities when it comes to talking to their children about life skills,’ says Chris Irwin, director of savings at Yorkshire Building Society. So if you don’t know where to start, we’ve asked the experts about which lessons matter most (Picture: Getty Images)
Teach kids that needs and wants are different
Tanith Carey, parenting and psychology expert and author of What’s My Child Thinking? says that in today’s ‘tap-and-go society’, you need to introduce friction to slow down the payment process, otherwise children will use cards to buy items without thinking – creating a habit that will continue into adulthood. ‘When you buy something, talk to kids about the difference between a need and a want,’ Tanith tells Metro. ‘Explain that “needs” are everything you require to survive, like food and shelter, while “wants” are complementary add-ons which are nice to have but you can live without them' (Picture: Getty Images)
Saving isn’t punishment, it is freedom
Lesley Thomas, author of bestseller Parents, Let’s Talk Money, says teaching children that saving isn’t a chore is a vital thing to do. ‘Position saving as something that creates choices,’ she says. ‘Set up a savings jar or account for something they want – for example a toy, game or a day out – and celebrate each small milestone with them to reinforce the positive feeling of saving' (Picture: Getty Images)
How a salary works
Tanith says children need to learn that most of us get a fixed amount of money regularly.
‘Just like in the real world, tell your children you will pay them a fixed allowance on the same day each week, just like a wage, and it’s their responsibility how they spend it. By trial and error, this will teach them the value of money and help them to understand that it’s not an unlimited resource.’ Lesley says that if you can let children make small financial mistakes in a safe place, it will help them to get better with money over time. ‘If they spend all their money quickly and regret it, don’t bail them out immediately,’ she suggests. ‘Instead, discuss what they might do differently next time, framing it as a learning moment' (Picture: Getty Images)
What happens as money grows
Compounding – the way money grows over time – is a vital lesson for children, says money blogger Francesca Henry, who writes as The Money Fox. ‘It is important because it can either work in your favour or against you. It can work in your favour, for example,with investing, where you can put in an amount of money and it keeps earning money for you,’ she says. ‘It can harm you with debt, where the interest keeps accruing and you then have to pay back more than you initially borrowed' (Picture: Getty Images)
You shouldn’t spend everything at once
Ivana Poku, parenting podcaster and mother of three, says she teaches her children to save with the 50% rule. ‘One of the first things we started teaching ours is that they can’t spend more than 50% of what they have,’ she says.‘So, if they want to buy something, they need to have double the amount [it costs] in their account. It’s a great money management tool' (Picture: Getty Images)
Parents have to make spending choices, too
If you don’t teach your children that you are making decisions over your spending, they won’t learn about choices, suggests Tanith. ‘Parents often like to feel as if they are all-powerful providers. This leads children to believe we have an unlimited amount we can spend however we want – and one day they’ll be able to do the same,’ she says. ‘To help them think responsibly, calmly share some of your own money management decisions. When you’re out shopping, chat through your choices and don’t be afraid to show them how your purchases affect your bank balance, so they learn basic cause and effect'.’ (Picture: Getty Images)
