Teaching your children how to handle money and save and spend wisely is essential, but something that many of us are neglecting. Research from the Financial Services Compensation Scheme (FSCS) found that more than 25% of children under 12 in the UK have no experience with money. And with eight million adults in the UK experiencing debt problems and 40% having less than £300 in savings according to Citizens Advice, the earlier we start talking to our children about money the better.
So here are five tips for teaching primary school kids about money.
Count with money
How often do your children see you pay with coins or notes? In our current society, you can go for weeks without touching physical money. But for children to learn the real value of money, it is best to start by counting out actual coins and notes.
You could begin with a hundred 1p coins before moving on to different coin combinations. For example, how many 10ps make £1? How many 20ps? How many 50ps? Then you can mix it up a bit and try using 10ps, 20ps and 50ps together to total £1.
Then the same with notes: how many £5 notes make £10? Can you make £20 from a combination of notes and coins?
Not only will this help your children’s mathematical skills, but it will also help them get used to handling money.
What does £1 buy?
It can be hard to understand the value of money, especially if you have no experience with it. One way to teach your children is to give them their own £1 coins and take them shopping. Maybe do one trip to the supermarket and one trip to the high street. How much could they actually buy with £1? Was it easier to find cheaper items in the supermarket or on the high street? Were they able to afford what they wanted?
This type of activity helps children understand the value of money and what they can actually afford.
Give them pocket money
One of the best ways to teach young children how to handle money is to give them pocket money. If you give your children a small amount each week, they can start to take responsibility for their finances. They can count how much they have and decide when they want to spend it or whether to save a portion.
You could give extra amounts for helping out around the house (beyond what you normally expect) or to reward especially good behaviour, therefore encouraging the concept of working for money.
Pocket money will open a dialogue between you and your children about money. You can talk to them about how much things cost, the idea of saving up for something specific and even the concept of once it’s gone it’s gone.
Teach them how to save
Learning how to save can be the key to a healthy financial future, so the earlier your children start the better. If you are giving your children pocket money, talk to them about keeping some of it back for savings. This money can go into a savings account you have set up for them or even just into a piggy bank.
One way to encourage saving is to match what your children save. So, for example, say they choose to save 50p; you will then match this amount, so their piggy bank or savings account will actually be topped up with £1.
You can also set savings goals. The target savings could be for something for the child personally, or you could set a family savings goal for something like a day trip. Set a target and monitor their progress as they get closer to attaining their goal.
Explain cashless transactions
We are living in an increasingly cashless society, so talking to your children about online purchases or debit card transactions is essential. Have they ever wanted to download a movie that cost money? Explain to them that by clicking the ‘download’ button they are spending money just like they would do in a shop. To demonstrate this, show them how much it would be in coins or notes. Or show them the transaction on your current account or credit card statement.
If your children have a good understanding of physical money, maybe consider getting them a prepaid card. With cards such as gohenry, parents can upload pocket money; children from the age of six can then use the card as a debit card. Parents are able to set spending limits and can choose where the card can be used, so they stay in control. Children can then learn how to use a card and a mobile app to manage their own finances.
