Over the last two years, millions of families have had to rethink their financial situation and seek out either new employment or support from the government. Despite this, nine in 10 adults don’t find it easy to talk about money and many don’t want to discuss it at all.
But money can be an important tool for kids to learn about boundaries, responsibility and independence, and the earlier they understand how it works, the better they are able to handle it in the future. Local Financial Advice, a company that helps people connect with FCA-regulated advisors, has some tips on talking to kids about money.
Teach young children while you shop
Taking your children shopping is a great first environment to introduce them to the concept of money. As younger children learn about numbers for the first time, quiz them on prices in your local supermarket. This stage is all about repetition and letting your child recognise patterns – even something as simple as noticing when the price of items change shows they’re engaging with the concept of ‘money’ separately to ‘numbers’.
Use special occasions to introduce them to spending
Use occasions like holidays and day trips to introduce kids to decision-making and spending a small budget. Wherever you take them, they are naturally drawn to the gift shop. Instead of letting your child pick an item then giving them a ‘yes’ or ‘no’, give them an amount they can spend and encourage them to find an item within their budget.
Talk to them about pocket money and saving
A big step towards independence for children is being trusted with pocket money. Giving them just a small amount every week encourages them to think about how they might spend it, and introduces the difference between instant and delayed gratification. Perhaps they have their eyes on a new toy – this is the perfect time to explain that not spending money now can lead to bigger purchases later.
Establish a chore system
Another important milestone is when your child becomes responsible enough to take on small chores around the house This is your chance to shift your child’s association of money away from the simple act of giving (pocket money) and towards the work needed to earn it. Talk with your child about why they want more money and what they would do with it. This also helps your child to think long-term about how much money they need and the amount of work it would take to earn it.