It’s important to teach our children responsible money habits to set them up for a healthy financial future. Here are five lessons to learn.
1. Give pocket money
Give your child regular money and responsibility over it by providing a piggy bank. Tell them that the aim is to fill it and once that’s done, take them to the bank and open an account. Larger banks and building societies will often let children open current accounts from the age of 11, but some are restricted to over 16s. Some accounts offer credit interest. However, if you want to grow your child’s money, you’re better off getting a children’s savings account, as rates are usually higher.
2. Lead by example
Your children look up to you so strive to be a good financial role model. While shopping, explain why you’re buying one thing and not another. And always tell them that you put aside a chunk of your pay cheque each month. Explain the value of hard work and responsible spending, and teach the difference between ‘need’ and ‘want’. Encourage conversation by asking: ‘What do you want your future to look like?’ It will get them thinking about a positive relationship with money.
3. Set rules
Enforcing boundaries with money will teach your kids to not overspend when they’re older. Give them set amounts that they’re allowed to spend so they understand that money isn’t endless. Stick to rules on the amount you give them and never give in to requests for more. They’ll learn to work with the budget they have.
4. Get a pre-paid card
There are several excellent apps with pre-paid cards that give kids financial independence while you maintain control. We like GoHenry which is suitable from age six. You can set limits for spending and where the kids can use their prepaid card. We also like Osper’s prepaid card which connects to its app, showing you how much they’ve spent and their remaining balance. Similarly, Nimbl’s prepaid card links to the app and gives spending overviews, with a micro-savings feature where children can save between 5p to £5 whenever they spend.
5. Write down goals
Writing down specific goals on a chart makes saving real, especially for younger children. Create a timeline. At one end of a piece of paper, write £1. At the other, write their goal – for example £10. Across the sheet, write checkpoints of 10 per cent, 20 per cent and so on. Mark off every saving they make so they can visualise themselves getting closer to their target with every pound they put aside.
Check out Take a Break Super savers for more saving, budgeting and finance stories, tips and inspiration.