When your child grows up and leaves home, they'll be responsible for their own finances. But will they be ready? Money is key to a safe and successful life, and your son or daughter will depend on it for all manner of needs and wants. But dollars can be hard to acquire, and even harder to save, without preparatory guidance, and that's where you come in. With hints and tips from Mom or Dad, they can learn the key elements of money management as they grow up. It's never too early to start dropping those hints, so whatever the age of your son or daughter, you can start right now. A light-touch, drip-feed approach will build expertise without the need for formal teaching, and these five pointers will guide you along the way.
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Tips for Raising Financial Responsible Children
Show that money is precious. Let your child see the care you take with your money, checking prices, counting change and calculating expenses. Help them understand the need to earn and save in order to spend, explaining the basics of your family finances as an example. When there's a treat or holiday to consider, let them get involved in the search for the best deal. Examples like these will bring meaning to money for them, and help them appreciate its intrinsic value.
Train them in counting and balancing. If your child is very young, they'll enjoy identifying and counting coins, and helping you with your payment cards. For an older child or teen, you can provide useful know-how in areas like budgeting and account-checking. Show them your bank account online, pointing out the "in" and "out" columns and inviting them to check one against the other. If they have an account of their own, prompt them to keep tabs on it in the same way. If they find money matters tedious, inject some fun and excitement by suggesting they save for something special. You can also inspire interest through money-themed games, like searching for the most expensive property, car or garment online, then comparing with the cheapest for a sense of scale.
Show how to compare values. When your young person starts shopping for themselves, they'll want to stretch their money as far as possible, and for this, they'll need a sharp eye. Again, some parental training will help. When you're choosing groceries, invite them to help you spot the cheapest options, then point out the different weights or sizes, and help them adjust their verdict to fit the best value per kilogram or volume, which may be different. Some stores show these true values in small print below the advertised prices, so train your youngster to look out for those true measures. Of course, there will be other factors to consider, too, such as quality, convenience and ingredients. If your child asks why you've chosen the more expensive brand of beans, say, you can explain that they taste better, contain less sugar, or carry a fair trade pledge, perhaps. Point out that best value doesn't always correlate with the lowest price.
Introduce saving and investment concepts. Your child may discover for themselves the value of saving money. If you give them some funds for the tooth they've lost, they may forget all about it for a while, then recall it when they want to buy a toy. You can build on this saving concept by giving them a piggy bank for their pocket money and reminding them to count up the ever-rising pile of coins. As they grow up, explain how banks and building societies can keep your money secure, and how they add interest, too, with certain arrangements. Tell them a little about your own banking arrangements, as an example. When they're ready, introduce them to a reliable website offering advice on the current range of investment options, and help them open an account of their own.
Discuss earning methods. Talk about careers with your young person. Help them select one that will combine enjoyment with good financial prospects. If they're keen on a type of work that sounds financially risky to you, make your concerns clear, reminding them of the need for a reliable income. If they're fixed on the idea, help them think of ways of counteracting the risks, such as running a side hustle for extra income, investing more savings, or studying for a qualification to support their aims. Help them keep finance in focus as they plan their future.
Your year-on-year guidance in personal finance will pave your child's way towards a great future. By training them up to be money-savvy, you'll set them on a safe and steady path through life. Want to really set them up for success? Depending on their maturity, you may want to sign up together for our Financial Foundations program. It's an 8-week program (two hours per week for 8 weeks) that focuses on a different topic each week.