Research from the Money Advice Service has shown that children develop their understanding of money early on, with it being suggested that their adult money habits will be set by the time they reach the age of 7. So, with this in mind, it makes sense to start early with your child and teach them the value of money and the benefits of saving it. But how exactly do you introduce money to your child in a way that they will understand?
Here’s a few things that you could try:
Introduce a rewards system
As an initial introduction, you could present the idea of saving to your child through a rewards system. Although this system won’t actually involve money, it will demonstrate to your child that you have to earn something in order to receive rewards.
So for example, if your kids love watching TV or playing on their games console, but also tend to do the opposite of everything you ask (we’ve all been there!), you could say that they have to go to bed on time, eat all their dinner, tidy up their toys etc. in order to earn the right to watch extra TV or play on their games console for an extra 15 minutes.
You can download loads of free rewards charts here, which are really nice and simple for your child to understand. Set the boundaries by telling them that they’ll need to receive 5 ticks before they get their reward (this can change depending on the age of your child) and give them a tick when they do what you ask, and a cross when they don’t.
As they get used to this system your little one should begin to understand that if they save up enough points, they will be able to do the activity of their choice for longer – a great life lesson!
Encourage them to have a savings goal
Get children used to using money from as early as you can. If you have primary school aged kids (and up) you could let them earn pocket money by doing chores around the house.
We’re not talking crazy money here, just a couple of pounds will do. For instance, if they do the dishes or load the dishwasher a few nights a week, you might want to give them £1 for doing this chore well, and another £1 if they do the dusting once a week, for example. It’s another good way of teaching them that money doesn’t grow on trees and that they have to do their share of work to reap the rewards. Read our guide to pocket money here.
Once your child starts to become familiar with money, you can then introduce to them the idea of saving for a goal. Next time you’re in the supermarket and they’re pestering you for a new toy, explain to them that they’ll have to budget for it from their pocket money by saving up until they can afford it. You can then sit down with them and calculate how long it will take them to get the money together.
Lead by example
It’s no secret that children copy their parents, so when you pay for something big, or for a treat for yourself, explain to your child that you had to work hard in order to pay for it. You could also try talking to your partner about your finances in front of your child to get them used to hearing about it. When doing this you could mentions things like saving up for the family holiday or how long it will take you to buy the new car that you want. Just be sure not to mention anything that could worry your child, as we wouldn’t want that!