Our customers are our priority during the challenging times we’re all experiencing. Please only call us if it's urgent, so we can help our most vulnerable customers. Please bear with us, as our call waiting times are longer than usual. You can find our latest updates here.
12th April 2018
We teach children all sorts of things at a young age to keep them safe and well – brushing their teeth, crossing the road, not talking to strangers. It is therefore amazing to see in a recent report by the Money Advice Service which suggests that just one in four children aged between 7 and 17 have received lessons in basic money management, despite it being part of the national curriculum. That’s quite a worrying statistic, especially in light of the latest figures that show that UK household debt has reached a record level of £1.5 trillion .
So, to avoid sending your children out into the world financially unprepared, what can you do to help them through the money minefield of saving, borrowing and spending?
Start Using Cash Again
Many of us now rarely touch actual cold, hard cash as everything has gone digital and many transactions are carried out using online banking or card payments. By withdrawing physical money and paying using notes and coins, your child will get a much better understanding of how money works and how to budget because, once it’s gone, it’s gone.
Get the Kids Involved!
Once you’ve withdrawn the cash, make sure you involve your children in the act of paying for goods and services at every opportunity. You can start off by playing shops at home with them and using real money so they can get a sense of how a transaction takes place. Once they seem comfortable with this, let them hand over the money when paying for things at the supermarket. Working out the change can also work wonders for the mental arithmetic.
For older children, why not get them involved in handling some of your real-life bills (under strict supervision of course!). You could use a price comparison website to show them how to compare deals and get the best price for services. It also lets them get to understand just how much it costs to keep the laptop and Playstation running!
Let Your Children Earn Pocket Money
Pocket money is great, but make sure you allow your children to ‘earn’ their pocket money, rather than just giving it to them. If they can see how much work has to go in to getting money in the first place, they’ll learn to appreciate its true value.
Make Your Children Save Up for Things
Rather than buying your kids ‘big ticket’ items only at Christmas and birthdays, encourage them to save up and buy them for themselves. Not only will they respect the item they are buying and treat it with more care, they’ll also gain a better understanding of what it means to save. This can be further encouraged by giving them their pocket money in smaller denominations, for example, instead of giving them a £5 note, give them five £1 coins and encourage them to put one coin into their savings. When they’re saving, try to remember that it’s the act of saving that’s important, not necessarily what they want to save up for. Try not to be too negative or discouraging if they decide they want to save up for another Barbie doll, despite already having 10. What’s important is that they’ve learnt the importance of saving up.
Get Them to Open up a Bank Account
While using ‘real’ money is a great idea for children to gain an initial understanding of how it all works, there’s no point ignoring the fact that this is the 21st century and most transactions are now carried out online. As your child gets older, open a bank account for them and allow them to use their card to pay for things too. In the UK, many of the major banks allow children to have savings accounts from the age of 7 years old and debit cards from the age of 11. Just be sure to supervise the whole process and maybe don’t let them carry their cards on them at all times.
It is also great practice for them, checking their account online from time to time to make sure that they know where their finances stand.
The sooner that children are exposed to the realities of money, bills and their finances, the better they will be able to handle it in their adult life. Just be sure to make the process fun as well, especially when they are very young. You’ll soon have them knowing the value of money as if it were child’s play!