Fun ways to teach your kids about money - shared by Moneywise readers

24 February 2017
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Thank you to all of you who wrote in to give your tips for educating children about money. Here’s a selection of your words of wisdom, from saving into jam jars to earning extra for household chores.

Age 5+

Use a purse

“Give children their own purse or wallet, which is filled with pocket money and present money. If they want something, it is paid for from the wallet. It really focuses them on the fact that money does not grow on trees and helps them budget for things they really want.”

AC, London

Open an account as soon as you can

“Tell your children about money as early as possible. I opened a child account for my son with the Clydesdale Bank when he was six – those were the days of passbooks. He would ‘save’ as much of his pocket money as he could every week and visit the bank to deposit his savings. Over the years he watched the interest grow.”

SW, Scotland

Cash point lesson

“Take them to your bank of choice and open up an account for them. Then show them how to use the cash point to deposit cash (watching their faces as their cash disappears) and explain where their money goes and that the money is still theirs, just in a safe place earning some extra money (interest) – it works.”

JB, Maidstone

Incentivise saving

“When a child is ready to start receiving pocket money, open up an instant-access savings account for them. This should be the best account available at the time – not just for the interest earning potential, but for accessibility and convenience – you and they need to be able to pay in to the account at any time. “Take the child with you when you open up the account (with a nominal deposit), so they get familiar with going to the bank/building society and hear what is said.

“Then strike a deal with the child so that any pocket money they don’t spend each week and pay into the savings account you will match with an equal amount, thus doubling their deposit. Withdrawals are to be restricted to Christmas time or special occasions (to be mutually agreed as they arise).

“A child loves to see the balance building up and begins to set their sights on accumulating funds for something specific. They like to see when they get a special deposit from you for something special they might have done. They think twice about frittering away pocket money on things they don’t actually need/want. They develop a regular savings habit. In time, they learn about the value of (compound) interest.

“Starting savings for a child is something most parents do anyway. This way involves them directly and incentivises them to understand money better. The most crucial lesson they learn is that if they don’t put money aside there won’t be anything in the pot!”

FR, London

Age 7+

Teach input and output

“Children should be taught by parents from an early age about the value of money, so they have an understanding of ‘input and output’. For example, children should only be rewarded with something of value when they have contributed in some way towards its receipt.

Parents today are too keen to shower their children with expensive possessions at an early age, which then conditions the children to expect this kind of treatment throughout their lives without having to provide any ‘input’ for their ‘output’.

“My children were encouraged to take up part-time jobs to earn some money or to have assigned tasks around the house and garden in reward for ‘spending money’ – if tasks were not done or not completed properly, then no spending money. No tasks were ever assigned without ‘training’ in how to do them being given, so no excuses could be made in terms of not knowing how.”

DB, Shropshire

Make pocket money deductions and pay bonuses

“My top tip for educating children about money is to make them earn their pocket money, making deductions if tasks are not completed but also giving bonuses if tasks are done without any prompting.

“An ‘annual statement’ could be provided to show their earnings in total. This prepares children for the realities of financial dealings.”

WB, West Yorkshire

Want versus need

“While your child will naturally ask for the latest games console, making them understand the difference between needs and wants will help them make sensible spending decisions from a very young age.

“It’s OK to say no. As adults, we are often told ‘no’ and children need to hear it. “Parents should reinforce through words and actions that it’s important not to spend more money than you have. “One good way is to keep the just-for-fun purchases in check by not giving in to every request.”

MJ, Bristol

The holiday lesson

“It may seem harsh, but be strict on holiday allowances. Provide a set amount of total money as their holiday fund and get them to work out how to spread it, setting a daily budget. Then don’t interfere. If they spend more one day because of going somewhere, they will have less the next day but they manage it. If they spend it all in the first two days, it becomes a very long but well-learned lesson for the rest of the holiday.”

JB, Northampton

Use money jars

“I show my kids that saving money is normal. “Myself and the kids have change jars that we all put our change into. The kids regularly do chores around the
house to earn extra money for their jars. “Once a month or so, we empty our jars out and count what we have. I found this has made the kids comfortable with money, helps them with their maths and is fun.

“We will then go to the building society and deposit their money, using their account passbooks.”

GB, Essex

Pay your children interest

“Here’s a tip that will show children how their savings grow and the need to start saving early. “Agree an interest rate for their savings (keep it generous or they will quickly lose interest – no pun intended) – for example, 20% interest a month, which works out as £1 on the first £5 deposited.

“Give them 10 £1 coins to start them off, allowing them to put £5 into a glass jar and spend the other £5. Do this for three months, applying 20% interest a month to the total sum in the jar, and they will have £21.84 in the jar. “In the fourth month, start another jar and ask them to stop spending their second £5 a month and start putting the money into the second jar, also applying 20% interest.

“Let them watch the first jar fi ll up much faster as the months go by in comparison to the second jar and explain how starting early and saving regularly multiplies their small amount to something very valuable. “Treat them with the money they have saved, so they will remember it for a long time!”

RS, via email

Age 12+

Selling video games and toys

“I encourage my children to resell their video games and toys. I get them to look at the price the item is brand new and then research what price it is selling for second hand before they sell it. With the video games, my son looks at which retailer will give the best trade-in prices and sells to the store giving the best deal. He now looks when buying a new game for the best priced deals.

PW, Newcastle upon Tyne

Give jobs a value in pounds

“Always identify jobs around the house that children can do. Each job comes with a value in pounds or pence to your children – for example, ironing, emptying the dishwasher all week or sweeping the kitchen every other day.

“That way, they learn that the more you do and the harder you work, the more money you can earn.

“My daughter is now 14 years old and has been ironing my clothes since she was 13. She gets 35p per item to add to her standard pocket money of £5 a week. “She is currently saving up to have extra spending money when she goes to London with her grandma.”

DL, Lancashire

Make it fun

“Keep it relevant. For example, if they like football connect it to saving by explaining gross, net, deductions etc, using a footballer’s payslip. Get them to design their own bank account package or mobile phone package.”

SS, Kent

Find supermarket bargains

“Take them along on the family supermarket shop with a
budget and a list.”

RP, Warwickshire

“At a supermarket, show children the cost of 100ml for a drink. For example, the cheapest soya drink is 5.9p per 100ml. Therefore, the cost for 1 litre is 59p. Packets of food also come in different sizes, so this system is an easy way to work out getting the lowest cost.”

MC, North Somerset

Pre-paid cards

“Buy children a prepaid card and load their pocket money on to it – that way, they get used to using credit cards while only spending what they actually have.”

MB, Bognor Regis

Treat them like adults

“Treat children as adults when it comes to family fi nances. Talk to them, show them bank statements, and explain to them how money works. Make it fun if you can.”

MJ, Holywell

Involve your children if you have a business

“We ran our own business and involved our daughters in everything. They have all grown up to be good money managers. When one was made redundant, she had six months’ money put by for the mortgage if she couldn’t work. Her boss couldn’t pay his first month’s mortgage and he was a finance director!”

FW, via email

Have your say

This article is part of Moneywise’s ‘Get Financial Education Working’ campaign. Please
keep your tips and thoughts coming. We’d love to hear more about what you do at home to educate your family.

Email editor@moneywise.co.uk.

In reply to by anonymous_stub (not verified)

My two daughters are now 28 & 30 yrs old. As young children we lived in a village, the children attended the local junior school and given £2 pocket money each per week they would spend this on sweets in the village shop. To avoid this I opened them both a building society account and paid in £10 per month. Their spending habits changed immediately. Instead of sweets they looked forward to going to the local town and choosing something to purchase, withdrawing the money from their accounts to do so. Occasionally I would add a small bonus to their accounts If they had carried out some jobs for me and summer holidays they were given a sum which had to cover their actual family holiday spending and any other treats they wanted. Both became very canny with their monies yet other parents laughed at my attitude saying 'it's only pocket money, lighten up'. My husband who was self employed worked long hours often away from home so the girls had to come shopping with me (no internet in the early nineties). They learned to look beyond what the supermarket was touting as the latest 'offer' and how to work out what really was the best bargain. My mantra was if I could save £1 then it was £1 more I had to put towards a treat for them. It obviously sunk in as the youngest informed one of her friends' mothers that mummy didn't buy anything unless it was on offer. They continued to 'save a little, spend a little' when they had Saturday jobs in their teens. When our youngest attended university we agreed we would pay her accomodation costs and she would have to take up a student loan to cover everything else. She budgeted her student loan on a 52 week basis so always had some funds available and never had any debt other than the student loan. She also continued to work in the local shop during uni holidays which had employed her as a Saturday assistant. Both daughters now have long term partners and interestingly have instilled their financial knowledge in their partners who although have good jobs were wasteing money. Bitten by the savings bug the partners discovered they could save considerable sums each month and both couples have now purchased their own homes. Their savings habits include always checking insurance of any kind for cheaper premiums on renewal, checking out any voucher codes before making any purchases, haggling with mobile phone companies, using websites to check out the supermarket deals etc etc. All are paying into pension schemes as they understand 'compounding returns'. We are very proud of what they have achieved to date, my husband and I are not well off, he worked hard and being self employed had to fund his own pension but we are comfortable in retirement with pension pots and savings, it can be achieved even on a low income.With my husband often working away I could only work part time as living in a rural area with no near relatives there wasn't the nurseries etc there are now and the few child minders only wanted to work school hours/school terms plus employers were a lot less flexible on working hours. I have only recently retired and some of my young colleagues in their early twenties appalled me with their attitude to money. Working full time earning £23k average, no student debt, living at home paying parents £100 a month if anything, no attempt made to save, I couldn't understand why they were penniless two weeks after being paid. Parents...It's never too early to instill financial knowledge in children and schools need to have more funding and staff to teach personal finance and taxation.

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