Talking to your kids about money can be a difficult thing. You want them to understand the value of pounds and pennies, and just how much time and work goes into earning them, but this is a pretty hard thing to explain to someone who only ever has to think about playtime, chores, and homework!
That’s why you need to make this conversation easier on yourself. Indeed, kids don’t learn best just from a few talks here and there. You have to routinely show them what money means and how handling it can affect their life. You can even start to teach them this lesson from the time they’re old enough to walk and talk when you adjust accordingly for age.
But if you’ve got kids over the age of 5 and you want them to get to grips with the basics of financial management, this is the post for you. You can talk to your kids about money in a way that they understand how serious it is, but they also don’t become afraid of spending it or losing it. Indeed, if you can make the lessons fun, the kids will even love learning them! So check out our five tips below.
Talk About Money Positively
This ensures your kids always approach financial management with a sense of confidence. Money can be a scary thing when you’re not sure where you are with it, but the more you talk about it in positive terms, the less apprehension your kids will have when facing it.
Even in times of hardship, when they’re maybe in between jobs or their rent is being raised, they’re going to feel like they can take the challenge on. That’s an essential mindset to have when it comes to finances, and very few people are able to build neural pathways that allow for it.
Discuss Prices Together When Grocery Shopping
This is one of the easiest ways to teach kids about the true value of money. It’s a visual demonstration of how far money can go without being too complicated.
Go grocery shopping together and spend some time looking at the price tags on the items you want to buy. Point out the numbers to your child and ask what they think that means against the pound you have in your pocket, or how many of this certain item could fit in the £20 note you’ve got in your purse.
When you’ve done this, keep heading round the shop for the other items on your list and check with your child. How much is left in whatever amount of money you initially introduced to them? At the end of the shopping trip, ask them what they felt about the way the money was spent. For example, do they think you managed to pick up a lot of items? Or, do they think the money lasted a while or was spent quite fast?
You don’t have to do this every shopping trip, but it’s a good idea to try here and there to see how your child thinks about value.
If You Give Pocket Money, Always Tell Them What Spending it Means
This is going to require being firm, and maybe a bit strict, but it’s an instant lesson your kids will always remember. Once their pocket money is gone, it’s gone! If they spend it all in one go, they can’t have any more until next month – no matter how nice that toy they’ve just spotted looks!
If They Buy Something Themself, They’re Responsible for it
That means if it breaks due to carelessness, you’re not going to replace it! Kids often don’t quite understand the value of their possessions, even after you tell them to look after the things you buy for them. As such, if they were careless and the item gets broken and needs to be repaired or replaced, they might just have to save up for it themselves. Of course, this doesn’t apply to accidents.
Talk About the Future When They’re Old Enough to Understand it
Kids of a young age can’t quite visualise the future. All they can really understand is what’s happening here and now, and being a grown up is a far off thing they can think about later. Because of that, it’s best to leave any conversations about their financial future until they’re old enough to parse what you’re getting at.
Indeed, you may want to leave them everything in the will one day, and you may wish to use a property transfer deed to ensure they get the house you paid for without any trouble at all. But if they’ve not even reached their teen years yet, this is going to be a difficult and awkward conversation to try and make your way through!
Whilst you can make some decisions about what the future is going to look like, focus on creating good money habits that affect them whilst they’re young. Then, when they get a bit older and start thinking about things like their first job or maybe moving out one day, you can broach this conversation with total peace of mind.
Talking to Kids About Money: What to Keep in Mind
If you want your kids to know just what it takes to make and keep money, start the lessons when they’re young. Institute good habits from this age – and make sure they see you with a few of your own – and they’ll carry those same habits into adulthood. Ultimately, this all means you won’t have to worry about the way they approach money in the long run!
So take the tips above into account, make sure you have strong pocket money rules in your household, and keep up the good work until they’re 18 and you don’t have to keep an ever watching eye over them anymore. You might want to be sure you’re still at the end of the phone if they need some advice though, just in case!