How often at this time of year do we hear a weary parent tell their child: ‘money doesn’t grow on trees’? Here are our top nuggets of wisdom to help them manage their children’s savings and ‘personal finances’.
Teach kids to budget: If your child is receiving a weekly sum as pocket money, insist that it must last the week, not be spent in ten minutes. If she spends it instantly, and then needs more later in the week – it’s time to stand firm!
Set goals: this basic planning skill can be applied in all areas of life. Structured planning is crucial, even at a young age, as people rarely achieve what they did not set out to do. This leads naturally to our next skill: saving.
Learning to save: the key tool here is the piggy bank. We suggest two: one for short-term treats, one for the longer-term, Xmas or the summer holidays.
Basic currency skills: start dealing with cash using only 1p pieces, and by counting coins, show how coppers can be exchanged for larger coins.
Shopping skills: when your child suggests a purchase, show her a similar product at a cheaper price, to develop the concept of finding a bargain.
Making choices: educate your child by making them choose between various options, e.g. branded product versus supermarket own-brand, and distinguish them by cost and value.
Teach about marketing and ‘hype’: in a sports shop, show your child a new bicycle, and the latest designer training shoe. Explain how the shoe’s price of £100 has been inflated by ‘hype’ – so much so, that it now costs more than the bicycle.
Shop around: show your child how prices are not ‘set in stone’. Make savings by finding the same item, at a lower price, in a different store.
Teach them to earn: it’s never too early to make the connection between work and wage. The notion of value has no meaning, until your child realises that money is limited by supply.
Make it ‘interesting’: explain that borrowing money to make a purchase means paying interest, and that using a credit card can mean you pay more for the purchase than the price on the tag.
