How to make money lessons fun
Letting go is never easy – especially when the time comes for your kids to go out and fend for themselves in the big, wide world. Emotionally, of course, nothing will make this process easy.
But you can sleep a lot sounder if you know they're armed with an understanding and appreciation of money which will enable them to put the nest egg you've saved for them to the best possible use.
Instilling this understanding can start even before your children reach school-age. You can encourage them to hand over money in shops, for example, and count the change. You can also introduce them to handling money through games such as make-believe shops and restaurants.
And you can encourage them to make simple decisions by sending them into the newsagent with 50p to spend on whatever they like, for example, so they can learn about balancing a finite budget with infinite needs.
Once your kids start primary school, your efforts will be supported by the curriculum, which will teach them the money basics. You can play a part in this by involving them in the weekly shop or car boot sales, or playing games such as Monopoly.
You can also start giving them pocket money, and encourage an early understanding of saving by providing a piggy bank and offering to match any money they put in it. It can also be helpful to take them to the bank so they can find out how to set up their first account.
Personal finance lessons will be stepped up once they reach secondary school. They may be encouraged to learn about starting a small business or opening a more sophisticated bank account, and will be taught the rudimentaries of saving and investing.
You can also support this at home by buying them their first handful of shares in a company they care about, such as a football club or a snack-maker, and encouraging them to follow the progress of their investment.
At this point, you might want to talk to them about their child trust fund (CTF) and the decisions you've made, so they have the knowledge to make a reasoned decision about their savings when their CTF matures.
At this age, you can start teaching them about budgeting. For example, ask them to keep a money diary and monitor exactly where all this money goes.
You could switch their pocket money to an allowance that covers school lunches, clothes and entertainment. This will enable them to budget for their lifestyle – and give them the freedom to make mistakes while the stakes are still low.
However, if they run out of cash, think carefully before bailing them out – it won't be pleasant watching them go without because of poor financial planning, but it's a good time to learn that the 'bank of mum and dad' has finite resources too.
Money lessons also involve learning to make compromises, so it's worth talking to your children about the family budget – and explaining how to cut the cost of purchases and other expenses.
For example, asking them to choose between a holiday camping somewhere sunny or in a hotel closer to home.
Once they hit their teens, you can encourage your children to get a part-time job, further increasing the amount of disposable cash they have to manage.
This should help them appreciate that you have to work for your money – which will hopefully reduce the chances of them taking a cavalier attitude towards the cash you've worked so hard to save for them over the years.
Once you've given your children a head-start by investing for their future, it makes sense to couple this with slowly introducing them to the concepts of budgeting, saving, investing and earning.
This way you'll help them to capitalise on that head-start. If you do this, letting go will of course still be an emotional wrench, but it won't be such a financially painful one.