Talking to children about money
If you don’t teach your children about money, there is a risk they won’t understand it or will pick up bad habits from elsewhere. By starting early, your children have the chance to make mistakes without any big consequences. But it can be hard to know where to start, so we’ve come up with some suggestions which might help:
Talk honestly about money.
Some people find it hard to talk about money, but if you speak honestly to your children about money, then it will help them be less awkward and teach them some important lessons. Talk to them about your own experience with money. Did you do everything right? Did you make mistakes? Would you do something different if you had the chance? Be honest and encourage conversation about what they think and feel about money.
Get them involved in financial decisions.
For young children, ask them to help you to choose items from your shopping list, based on your budget. For older children, send them shopping with a list and a budget. Talk to them about the choices they made and what they might do differently in future.
Learn to say no.
There’s so much that our children want to buy these days – in the real and virtual worlds. But if they get everything they ask for, they’re never going to learn the difference between ‘wants’ and ‘needs’, or the value of money. Learn to say no – and mean it. The best way to reduce the amount of requests is to explain that there are choices and consequences to spending money.
Teach them how to budget.
If your child is old enough to get pocket money, they’re old enough to make a budget. Encourage them to save up for something they really want and explain that they may have to delay the good feelings of spending now to achieve their goal later.
Encourage older children to contribute financially.
The number of young adults living with their parents has reached an all-time high, with more than a quarter of people aged 20 to 34 still living at home, according to the Office for National Statistics. If this is the case in your family, help older children understand the cost of living by being honest about the cost of the financial support you’re giving them. Deciding upon a financial contribution they could make will not only help you but ease their transition to independent living.
Lead by example.
The best way to teach your children about how to manage money is to ensure that you manage your own money well. Let them see you budget, save and spend wisely, and they will pick up your good habits.