There are many reasons why it can be challenging to teach your children about money, but the more financially savvy your children are, the better spending decisions they will make throughout their lives.
It can be difficult to know where to begin when it comes to talking about finances, particularly as parents often feel ill-equipped to give advice themselves. It’s also still a taboo to talk about money, particularly in the UK.
So how do you teach your children the value of money – and to be financially savvy?
“As they get older, especially when it comes to careers, often value is linked to self-worth,” says Clara Wilcox, founder of The Balance Collective, which provides career and work advice for parents.
“It’s essential that children realise that money is a tool – it helps you create opportunities and experiences as well as helping other people. It’s not just about having materialistic trappings.”
Be positive about it
“I think it’s important to talk positively about money; it’s something you control, rather than it controlling you,” Wilcox advises. “I would talk about what it takes to earn money, and what you get for it.
“For example, alternative donating toys to selling on sites like eBay. When it comes to saving, talk about what they want, how they can get it and have a visual representation to show the progress.”
Use play as a tool
Holly Pither, a PR professional, mother and blogger at PitterPatterPither, advises teaching children about the value of money from a young age by incorporating it with playtime.
“My daughter is just over two, but we are already trying to teach her what money is all about,” she says. “We regularly play shop and she brings her little wallet along with some change in and we swap that for her items.
“I always ask her if she is sure she wants that item and not something else. Seeing her thinking it through is really interesting.”
Learn about spending
Seeing how money is exchanged in real life can also help too, Pither adds. “We also walk up to buy eggs from a farm in the village once a week and she drops the money in the box each time,” she says. “I want her to know that it means something when you hand over money and that you must consider your options before you just spend.”
Show children money isn’t everything
“The other thing I am keen to ensure she knows however, is that buying something shouldn’t make you automatically feel happy,” Pither explains.
“I actively try and avoid showing that side of purchasing items when we go out so she understands that you don’t need to spend to feel joy.”
Let them make decisions with their pocket money
Giving your child a small allowance – enough for minor items like small toys or ice cream – can be a good idea as it teaches them how to be financially responsible and the consequences of spending without thinking about it first. If they are after a bigger toy, show them how to save up over time so they can buy it for themselves.
“Let them have pocket money and control of that pocket money at an early stage,” Pither says. “Teach them about how to save and why they shouldn’t just spend their money whenever they please. Always ask them if they are sure they want to buy something as it could mean they miss out on another item.”
Remember it’s OK to say no
As adults, we hear the word “no” a lot – and it’s important that children hear it too. It’s also crucial for children to understand how much a sum of money is worth. An occasional treat is fine, but you don’t need to give in to every request.
If they want a toy worth £50, explain how many hours an adult working on minimum wage would have to work to earn enough to afford it, to put the purchase into perspective.