Teaching your children about money in family life

Before your children are off to primary school, they may be with you for much of your weekday life and go with you wherever you go. When you go shopping, to the bank or cash machine, they may well be there with you but are probably a bit young to be learning much about handling money, savings, and being careful with their cash.

When they start to go to school and are off your hands a little, it is a perfect time for teaching your children about money since they are learning addition, subtraction, and other mathematical concepts. We know that it may be easier to do the shopping or order the groceries online without their involvement, but such activities are golden opportunities to establish some important fiscal skills, such as budgeting and saving, especially with five to seven-year-olds.

As children get older, they can begin to make some decisions about money, such as deciding how to spend pocket money, save for a desirable gadget or even helping you decide how to spend while on holiday. Rather like changing the assumption that milk comes from cows rather than supermarkets, children need to learn that money isn’t freely ‘on tap’ at cash machines.

Here are seven tips on using family experiences to teach your children about money:

1. Play games that have to do with teaching children about money. Board games such as Monopoly and playing at ‘shops’ can be fun ways. The Monopoly child can learn quickly and, of course, revels in making the adults bankrupt!
2. Regularly take your children shopping. Tell them what your budget is and make a game of buying what you need under that set amount, including spotting good value deals.
3. Organise pocket money so that children manage their own money. It can also be a much better lesson if they have to earn it first!
4. Encourage children to save. This can be easier if they know what they are saving for and why. Saving for something they want or to give to a charity, will work better than just telling them they should save for the future. Although it is helpful for them to open and own their own bank or savings account.
5. Children are often keen to work on their own Christmas present list, but this could be better if they have an idea of what the likely cash limits are. If Auntie Ethel only ever spends £10 on a present, the Christmas list should reflect that, and even Santa usually has budgetary constraints!
6. Teach your children how to talk about money – simple things like not boasting about money or possessions. At some point, they will need to learn not to ask too many questions about what money adults have or have not got.
7. Explain credit and debit cards (and possibly even the difference) and that they might be convenient, but come at a cost. Try not to lend or advance money to children, unless they fully understand what this means and if you expect them to repay it, make sure they understand the terms and conditions.

Raj Shah is the founder of Blue Wealth Capital in 2009. Previously being a stockbroker and private banker, he has developed a truly unique service that helps his clients to identify, achieve and maintain their desired lifestyles (for life) without fear of running out of money.