Teaching children about money: the dos and don’ts

It's never too early to teach children about money
"Previous generations often felt money was only for adults, and children grew up with no money skills at all" Jo Wiltshire, parenting expert
  • | by Emily Bater

More than a third of young people have debts of almost £3,000, according to an August 2016 Money Advice Trust survey of 18-24 year olds.

The survey found that 32% felt their debts were a "heavy burden".

An accompanying report by the trust and the National Debtline into young people's borrowing habits found that earlier financial education could have a significant impact on young people.

They have advised the government to begin financial education in primary school and for financial services, like banks, to increase their financial education services.

But what can parents and family members do to help children learn about pounds and pennies?

From real life to play time, these dos and don'ts could help kids get financially savvy.

Don't… let them use your debit or credit card

A girl counting coins

Giving your child financial responsibility is one thing, but giving them access to your debit card or credit card is another.

While it's great to teach children practically, they'll need a safety net. Instead of trusting them with your bank details, give them their own child-friendly bank account or debit card instead.

GoHenry is a bank account and card especially for children, which allows you to transfer pocket money and savings straight into their account.

Parents get an account too, so they can see how kids spend their money in real time, set spending rules and decide where they can use their card.

A pre-paid debit card for under-18s, Osper also offers transparency, built-in spending limits and parental approval.

Parents can order an Osper card and attach their own debit card to it to easily load money onto the card.

Do… use real life

A woman in the supermarket with her daughter

Teaching children about spending money can be easy if you use real life scenarios, reckons Jo Wiltshire, parenting expert for Childcare.co.uk.

"Use your everyday life to get your child used to dealing with money and the value of things. Let them help you make shopping lists and budget for a supermarket shop," says Wiltshire.

You could also encourage them to cut and use money-off coupons, or set up a play shop or imaginary restaurant at home so they can mimic what they see you do in real life.

Visiting your local bank is another way of teaching children the importance of savings and how things like Isas and investments work.

A number of banks have their own financial education programmes to help children of all ages learn how best to use and spend their money, including RBS MoneySense, Barclays MoneySkills, Lloyds' Money for Life and Nationwide Education.

Metro Bank also runs its own financial education programme, where children can learn about creating a budget and visit the bank itself.

A Metro Bank spokesperson said: "Teaching children how to use, spend and save money are vital skills that will help them into adulthood and at Metro Bank we're proud to support schools by educating children about the importance of looking after their money."

Don't… start too late

A woman looking at bills with her baby

It's important not to underestimate you child's capacity to learn, and financial education can start as soon as they begin to demand new toys or sweets.

It could just be giving them change to buy their own bag of sherbet lemons at the corner shop or pocket money to wash the car, but it's never too early to get started.

"Previous generations often felt money was only for adults, and children grew up with no money skills at all. These days, they are able to shop at younger and younger ages – so those skills need to be part of growing up," says Wiltshire.

Do… make it age-appropriate

A little girl taking her piggy bank to the bank

Starting simply is a must. A young child will be thrilled with a cool money box, and will love role-play games. A six-to-eight year old can have a savings account, and will enjoy a trip to the bank with you. 

Older children can start to budget their own pocket money, and add to it by doing chores, selling old toys, or doing a summer job.

Don't… expect them to learn in school

Boy with piggy bank

Financial education became compulsory in schools in England in 2014, but that doesn't mean your child will be taught to the level they should.

While some schools provide long-term lessons as part of personal social education (PSE) lessons, some only include financially orientated sessions for a few hours each year.

Do… lead by example

A man doing internet shopping with his son

"Teaching children about your own experiences with money and letting them see how you deal with money is the easiest way for them to learn," says Wiltshire.

"Teach them that it's cool to be in control of your money. Don't let it control you. Show them how a credit card works, and interest, and discuss how it might be better to spend money you have rather than money someone is lending you."

If you're having money troubles and you're not sure how to handle it in front of children, Clare Francis, savings and investments expert at Barclays, believes that honesty is the best policy.

"I think most parents want to protect their children as much as possible but equally not lie to them. If your financial circumstances change and it has a negative impact on what you can and can't do as a family, it's important to explain to children that something has happened and that some cutbacks may have to be made.

"Children shouldn't have to worry and stress about money problems. However, understanding the concept of money and what having it, or not having it means, is important."

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