Teaching children how to (and how not to) manage money is one of the best skills you can give them. So I’m going to share some of our ideas and what’s worked with our family, I hope it’s of some benefit to you.
- Be an example: if they see you buying on impulse, wasting money on gambling or never waiting for anything, guess what?… They’re gonna think that’s OK and they’ll probably do it too.
- Teach them to save: Our rule (as my parent’s had for me) is that out of any money gifted for birthdays etc, the child should aim to save at least half/ spend no more than half…. quite often they get a kick out of it and save even more!
- Teach them to give: Not only will giving time and effort help them to become lovely, giving people but giving a gift can be really enjoyable and rewarding (tip: if you see it as a last minute chore to rush through out of duty or do for the child, they won’t get the warm, fuzzy feeling,,,and neither will you.)
- Teach them to bargain hunt: Charity shops, special offers, online…make it interesting. (can you find a belt you like for under £2?)… and to know when it’s worth the investment.
- Teach them the value of money. This one is a longer haul but is so worth it:
This starts as soon as they’re old enough to put money in their hand and you can trust them not to swallow it! Start with handing them a few coins to put in a charity box or pay for a sweet or comic, this has the added bonus of helping them count as they get older and you can use the math to explain to them why they can’t have something that day, BONUS! (Something along the lines of “the book is 3 coins, you only have one, but that’s enough for a sweetie”….saved me from loads of potential tantrums as children of even 2 or 3 can see how many coins they have long before they understand the pounds and pence value)
When our lovely daughter started primary school we (and her grandparents) gave her a small amount of spending money to choose her own sweets and magazine and if she had no money on her she didn’t have a sweet. As she got older this gave her independence to go into the shop alone (I was by the door) and gave her the confidence to talk to the staff there.
By the end of primary (at 11) she had an allowance of £20 per month and she had to use it for things like friends’ birthdays and school discos (20 may sound a lot but we were spending it on these things before anyway, so we figured it was better for her to do it and learn something in the process). There will be an occasion where they want to do something or go somewhere and they can’t afford it…. then it’ll take all your resolve not to just hand them the money, but they learn quickly to keep some back ‘just in case’ and to look at the month ahead and plan it out. (Valuable skills for adult budgets too!)
So with secondary school, we upped our game: We gave clear guidelines and explained we were only paying for school stuff and family outings, that was it. As she no longer wanted me to pick her clothes and had friends that lived over a larger area, we decided to give her the full allowance she has now, which is equivalent to second-child child benefit (as the first gets additional premium, but we want to be able to do this fairly in the future too). Again, this sounds a lot, but if you add up all the non-school things like clubs and fundraisers and birthdays, i bet you’d be surprised how quickly you get to that figure.
Having already splurged at about 8 years old and learned, she’s never been silly with this allowance and often has some left above her savings at the end of the month, we’re so proud of her! She of course buys the odd book or game I think is splurging, but she also has all her birthdays and other presents sorted for the next three months, so her system is obviously working for her.
As a side note, some people make their children do set chores to earn money. We tried that, but the punishment for not doing it is, by default, a lack of money…which (unless an unexpected opportunity popped up) didn’t worry her enough to make her do the task! I’m glad of that now, because her life doesn’t revolve around money or expecting something. She has no chores routine but instead will do it as required and is thoughtful enough to have voluntarily done 2 of my daily jobs when I was sick, bless her.
If the ‘working to a set chores routine’ thing works for your families, that’s great too. Just thought I’d share what we did, I hope it was interesting to read and I’d love to know what you think 🙂