What should you teach your kids about money?

Kids may not understand the details about money. They may not know, for example, the cost of the lessons that they so love so much. They may not get that when you buy groceries, there are different items that cost different amounts—even types of cereal for example.

But that’s perfectly natural: Kids haven’t yet had the life experience that it takes in order to accumulate those pieces of knowledge that guide you every day. But just because they haven’t gained those experiences doesn’t mean that you can’t impart age-appropriate wisdom to them. How you do it, though, is another question.

For example, you’d be wrong to assume that kids don’t know when there’s bad news or when there are financial pressures that are impacting daily life. What you need to do is figure out how to explain things to them in terms they can understand. What else can you do to teach your kids about money? This graphic explains it.

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Spending Habits That Your Kids Must Never Pick Up

Children are easily influenced during their early years. This is mainly because they don’t know better and they draw inspiration from the things around them. They’ll look at their parents and friends to learn how they should interact with the world, and it’s important that you instil good habits into your children from an early age.

With technological advances and the internet being more open and accessible, spending habits are a major concern among children. There are many horror stories of children spending thousands on smartphone and tablet games and apps because they don’t know better. It doesn’t help that apps now make it easy for you to make multiple back-to-back purchases and there’s virtually no protection unless you enable the child locks. Even then, it’s easy to make mistakes and your children need to be protected from these types of bad spending habits. To help you out, we’ve put together some useful advice that will help you teach your children better spending habits.

Spending Habits That Your Kids Must Never Pick Up - kids toys image

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Teach your children about finances as early as possible

You could run some games or exercises with your children that teach them about money and debt. It might be a difficult concept for them to understand, but with a bit of teaching and patience, it’s possible to teach kids good financial habits from an early age. However, this does mean that you need to be firm and vigilant with how you spend on them.

No more spoiling

Don’t use your kids as an excuse to make large purchases because this will only spoil them. Many parents don’t realize that spoiling your children is a quick way to teach them poor financial habits. It doesn’t matter if it’s sweets, a soft toy or the latest electronic gadgets–you need to be firm with them and stop them from coercing you into buying them extra things. Instead, encourage spending on meaningful things such as extracurricular activities, classroom equipment or extra study material. Teach your kids the difference between good and bad spending and you’ll be surprised at how mature they can be at a young age.

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Taking money too lightly

If possible, teach your children early on about what it takes to make money. Whether it’s applying for loans online or digging into your bank account with the auto-saved details, your children may start to take money lightly because they can see how easily you obtain it. While getting an online loan can be positive and beneficial, it’s still important to teach your children that money is not easy to obtain and it doesn’t grow on trees. It takes a lot of dedication and hard work to obtain and it’s important they understand this at an early age.

Some final words

As mentioned at the beginning, children are easy to influence. What you teach them at an early age will stick with them forever, so instil some good financial habits into them from an early age and balance how you spoil them so that it doesn’t become the norm.

How To Set A Good Example Of Handling Money For Your Children

Becoming a parent is one of the most rewarding experiences in life. However, the pressure to set your children up for the best start in adult life can seem like a monumental task. Teaching your child to cook, do their own laundry, and clean the bathroom all takes time. However, the most strenuous of lessons can be handling money. Money stress has the ability to keep you up at night, and can even be the main reason for relationship problems and family feuds – something everyone wants to protect their children from. Below are a few ways you can best educate your child on dealing with money and give them their best chance in life.

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Teach Your Child The Time Value Of Money

Earning pocket money is a given in many households with young children, however helping them to understand the time value of the money they receive may not be. Everyday life really does revolve around money. The tap turns on because your water bill is paid, and you get up every morning for work to ensure you have the money in order to pay that bill. Simply sitting down with your child, whilst playing a game of shop, to explain why the cashier is at work every day can help your child to comprehend the process of money, and why they have to earn it through doing chores.

Allow Your Child To Gain Experience Purchasing

Depending on the age of your child, you may think it is too early to allow them to go up to the counter themselves and purchase the fidget spinner they wanted so badly. However, giving them the experience of asking a shop assistant for help and advice on a purchase could start to build a good foundation for their spending habits. Encouraging your child to really think about and research their purchases to ensure they are getting the best price available, and highest quality. Just like you would seek advice on investments and pensions from wealth management services – you can educate your child on seeking advice on their purchases – no matter how small they may be.  This will help to set in a place a healthy and intelligent habit that will continue into their adult life.

Teach Them About Waste

Opening your child’s eyes to food waste and the cost of breakages could help them to understand the value – and the privilege – of money a little better. Accidents, of course, happen, and even more so when you have children. However, you can help your child to be more careful by explaining to them that what they have broken cost money, which is now having to be thrown away. It’s the same process with food. The rule “no sweets before dinner” is important to reduce the amount of food wasted in your household – explain that food also costs money and throwing it away is not only a waste of food but money too.

Hopefully, this has given you a few ideas on how best to prepare your children for their independent, working life. It is never too early to start instilling good habits, and they will certainly thank you for it later on in life.

Teachable Moments: Moving House

As an adult, you’re probably well aware of all the hassle that moving house tends to entail. You know you’re going to spend months viewing properties, scanning over contracts, and juggling buying a new house with trying to sell your old one. It’s likely a situation you’ve been through at least once before, so you know what it’s going to involve.

Your kids, however? They probably have no idea. By the time they’re of an age to understand what’s happening, their first move is going to be an alarming time. They can only remember ever living in one particular place. What happens to move them to another house is a somewhat mystical process, most of which goes over their heads.

This isn’t necessarily the best choice. If your children are of an age to understand what’s happening, then it’s worth seeing moving as a teachable moment. Rather than the process being something your kids have to go along with, but don’t get much information on, it can be a time of learning. There’s so much you can teach them during this time, but perhaps the most useful things to extrapolate are…

#1 – The Basics Of Home Ownership

Teaching your children about the basics of home ownership is a necessary part of your job as a parent, anyway – but what better time to do it than in the midst of a move?

Explain how ownership works. If they’re of an age to understand the math involved, then you can also teach them what a mortgage is. Obviously, you don’t need to delve into hugely complicated legal and economic detail – but a basic overview should suffice.

#2 – The Process Of Moving House

There’s no need to hide what happens to facilitate a house move. The sooner your children are exposed to the way the housing market works, the more time they will have to understand it before it becomes relevant to them. Focus on the basics:

  • How to find homes for sale. While going to real estate agent’s shop windows is the established method, the truth is that your children will probably primarily search for their own properties in future via the online property market, so you’re going to need to cover this.
  • How you go about selling your house and how you choose a price for it.
  • The basics of the legal process of exchanging contracts.
  • How the escrow process works – obviously, only if this is applicable to the move you’re doing.

Most children should be able to grasp at least the basics of the above; you can add or subtract where necessary depending on your child’s age specifically.

#3 – Stress Management

It’s not just financial teachable moments during the house moving process, either. You can also teach about how to handle stress. We all know how tough moving house can be, so showing your children that you’re on top of all the stress – and managing to keep smiling – can be a great practical lesson. Making it a lesson will also force you to cope with the stress better, so both parent and kids will benefit!

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Invisible Money – How to teach kids about money in a cashless society

Think for a moment about how many of your day to day transactions are made with actual notes and coins. In a world without cash, what are the implications for teaching children about money?

The Global Issue of Invisible Money

In 2014, the US Parents, Kids and Money Survey suggested 73% of parents agree that because of digital transactions, kids think of money differently than they did when they were growing up. An Australian survey revealed that over one in three (35%) children simply don’t know how digital purchases are paid for. Whilst in the UK consumers recently passed an important milestone on the path to a cashless society, with cash now used for less than half of all payments. These statistics highlight the influence digital technologies can have on how children understand money.

Not seeing physical money exchanged for purchases makes it harder for kids to get their heads around what things cost and how money works. They might not easily see the link between the ‘invisible money’ of online payments or contactless purchases with real money eventually coming in and out of their own bank account.

invisible money how to teach kids about money in a cashless society

Where Money Comes From

It’s not difficult to see how in an age where we can slot a plastic card into a ‘hole in the wall’ and obtain physical currency, or where you can ‘tap and go’ to pay, how our children might not fully understand where the money used to pay for things comes from. One method of explaining this is to describe to your kids the purchase path or the flow of money; from earning it, to depositing into the bank and ultimately the final purchase and receipt.

Making the point of using cash occasionally, rather than electronic funds can also help to provide younger children with a visual representation of how currency works. Once they understand physical money you could slowly introduce them to the idea of online and credit purchases.

 

Pocket Money and Chores

Many parents recognise the value of using pocket money, or an allowance, to teach children about budgeting. Giving your children pocket money in return for jobs around the house can help them understand the connection between time spent doing work and money. A weekly pocket money allowance can also help to develop your kids’ budgeting skills. If you give them a weekly sum which includes both an element for daily routine activities plus some personal discretionary money, it can teach them to prioritise between needs and wants and make choices around spending and saving.

Understanding the True Cost

Mobile phones and tablets make it easier for your children to spend money online sometimes without even knowing it. Another example of invisible money is where many games and apps are now ‘freemium’ – meaning that whilst the app was initially free to download, it will proceed to ask users to purchase special features or content for a fee. If making app purchases is not prevented by a password prompt, then a couple of accidental taps in a game could cause your children to make real-money purchases.

Figures show that 61% of kids are buying apps or making in-app purchases every month, it’s important therefore as parents to establish some ground rules to ensure your child is conscious and aware of the money he or she may spend and its consequences. One useful tip is to ask for the money from your child before they make the purchase to establish the connection that it is still real money.

Setting up a bank account.

Once they are old enough and especially when your child has a job or gets an allowance, having a bank account and watching the balance grow (or shrink) is important. By downloading the bank’s app they can easily monitor and track his or her spending. Another important habit for later in life.

If you can’t beat them join them

The ease and convenience of cashless transactions puts us on an irresistible march towards a cashless society perhaps in your child’s lifetime. Get them prepared early by giving them a prepaid card with a weekly or monthly allowance. These cards can be monitored online and teach the principle that money, whether invisible or not, can only be spent once.