Teaching kids about money is no easy feat. But without the relevant knowledge and skills, your children might find it difficult to manage their money effectively both now and in the future.
According to a survey by the London Institute of Banking and Finance, at least 72% of young people aged between 15 and 18 want to learn more about money and finance in school. Concerningly, more than eight in ten admitting that they worry about money.
No matter how challenging it might seem, it’s always worth knowing about some of the best ways to introduce money management concepts to your children.
How to teach your kids about finance: Our top tips
- Set an example
Children are always watching you and listening to your conversations.
If you have good financial health and you’re not visibly stressed about earning and spending, your children might underestimate the importance of personal finances.
On the flip side, making your money worries known and needing to make sacrifices for the sake of money could make your children feel confused, stressed, and worried about the role that money will play in their lives. At least 39% of adults don’t feel confident in their own money management, so it’s time to help the next generation.
When you set a healthy and realistic example for your children, they’ll be more likely to be naturally curious about money. When they start learning how to manage their finances, your children should have a balanced and calm attitude without any existing stressors.
- Show them the value of things
One of the fundamental financial lessons is knowing the true value of commodities. Let them buy a few smaller items from a younger age, giving a set amount of pocket money or spending money before you head into a toy shop, for example.
Allowing your children to handle money and make real decisions will help them to understand that everything has a value, even if it’s something small. When children understand that they need to be careful with their money, they might find it easier to approach complex terms like credit score or debt ceiling.
And when they remember the process of choosing and buying something, children will be more likely to look after their belongings carefully. These practical lessons are so much more helpful than any verbal suggestions you might make to your children.
- Explain how money is earned
Children need to know where money comes from, so you could help them by explaining the basics. You don’t need to go into details about earning money, dealing with HMRC or interviewing for jobs – try to focus on the fundamentals.
Instead of giving the same allowance every week, try to adopt a rewards-based approach to your practical financial lessons. With a strong incentive, children feel much more motivated to learn.
- Involve them in the weekly shop
As you walk around the supermarket, try to ask your children for their opinion. Encourage them to actively make decisions based on budget and value, allowing them to use their critical thinking skills as they decide.
Grocery shopping could serve as a brilliant foundation for savings challenges too. With solid techniques in place and a strategy that gently encourages – and never forces – children to think about money, you can help prepare young people for a financially sound future.
Money-savvy children are less likely to get stressed about money matters as they grow up. Even if your children are teenagers now, it’s never too late to start introducing a financial education.