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How to teach children abour money management(15 Posts)
Can we start a thread to share ideas about how to teach children how to manage their money.
I have a 12 year old who is about to start secondary school and I need some ideas to help teach him to budget his money each week, for lunches, buses, etc.
Get him involved in your accounting, explain 'this £X comes into the house, have a guess how much is left to spend' and it's a great way to get a conversation going. Also get him a teenage account with a debit card, explain he can use the card and is being trusted, but set him a challenge of always keeping it a be say £20? Put £30 in to start then £X a week pocket money, you get his statements and if he's still above £20, then set it to £30. Step-saving is great, then when he hits say £50 (if he can) either allow him a splurge as a reward for saving or ask if he'd like a savings account for a really special treat. Some kids will blow all the money but they still have to learn to manage on £X a week, and you MUST NOT TOP IT UP
I used to work in banking and this is how we suggested parents do things, usually really effective
If your child needs £20 per week for school then give them £22.50 and say if you budget properly you should have £2.50 left at the end of the week and if so you will double it. Sort of gaining interest for saving. If after a month they don't do it right you will deduct £2.50 each week from their pocket money like banks do when you go over your over draft.
I did this with my two and they failed only once and are now pretty good at managing their budget.
Is it in his pocket or on a payment card? Can you see it on line?
Mine have always managed ok - you need to start young and be honest
I wouldn't bother with the extra £2.50.
I'd break down the costs for them - bus, lunch etc.
So they know that the money they get = the money they need to spend.
I'd start off with giving just a week's money.
If they overspend, they walk home or go hungry, end of. Those are easy good lessons.
I got mine a bank account and a fixed sum every month. It is linked to a savings account and she must save 10% of whatever she gets.
I have a budget sheet open on the table all the time. I write what goes in and what comes out every day. She is very aware of how much bills etc are because if she wants something, she'll look at the budget first and then see if we have any spare or not.
One thing I want to make sure she is very good at before she leaves home is finances.
From 13 ours have had part time jobs / paper rounds etc and it's been really interesting seeing how well they manage their money and understanding that those trainers are 10 hours work etc.
Budgeting, being able to cook and understand how a family runs are really important life skills.
Mine are older now - 16 and 18 - I always used to top up their lunch money on-line regularly, DS was more careful than DD about spending it, more likely to take food from home, his top-ups lasted much longer.
I therefore decided to give them both a daily lunch allowance that I would give them weekly in cash (if they missed a school lunch for any reason, eg illness, I took money off the following weeks allowance). If I topped their school account up, they paid me back from lunch allowance, if they took sandwiches, drinks from home, they kept the unspent lunch money.
It worked - DD was much more careful about what she spent and also more keen to take food from home! It didnt actually save us any money, but it certainly made DD think about what she was spending. I pointed out to them that they would have to budget like this at Uni - and make decisions on buying or taking own lunch - so it was a good way to get used to it.
Izzy you are a
evil genius I'm nicking that idea.
Have a look at gohenry.co.uk. Its a debit card which you (or anyone) can pre-pay money on to. It works the same as any Visa debit card, so they can withdraw from cash machines, use in shops etc, same as your cards. They can manage their account online or on an app, it has a savings account facility so they can transfer cash from the current a/c to there, view their spending etc.
As the parent, you have a slightly different app, which manages their access, plus lets you add money. You can also set daily/weekly/monthly targets i.e household chores, homework done...which must be achieved before the next lot of money is released if you want.
We've just set it up for our kids. We have a d/d set up to be paid in every Friday to each of their accounts. So far, they've gone and withdrawn some of the money so they both have cash for holiday sweets etc. One has something in mind to save up for, and is planning to use the savings facility. At the moment we've not set targets as we've seeing how it goes, but we have discussed household chores and homework which needs doing, so will review it once they're back at school.
The main thing I like about it is the app, it's tapping into their existing use of technology in a familiar way, and gives them a degree of independence and choice, without having to discuss it with us first. The money paid in is finite, they know what we will and won't pay for from now on (mainly ad hoc sweets and treats!), so it's their to do with as they want.
I should say, ours are a year younger, so he doesn't need bus or lunch money, but it was set up with that in mind, so we'll either continue to use this account, or set up a standard bank account. But I do like the app, it's far less confusing than the sort of online access you get with normal accounts, as it's set up for kids.
I was in the supermarket today with my 9 yo Dniece. Her maths is about average for her age. She wanted to buy a snack for the cinema (much cheaper than buying in the cinema). She likes cheese strings. I pointed out that a pack of 4 was £1 but a pack of 8 was something like £2.25 so we discussed which one was better value. We also looked at the chocolate fingers where one pack of X grams was £1.50 but there was also a special offer for 1.5X grams for £1.50 and I asked her which one was better value. I think she got the message!
I have a 10 year old and we've started with interest and savings. She gets monthly pocket money and decides each month how much to put in her savings pot and how much to splurge. She can spend on whatever she likes.
I pay her interest on the savings - 1% a month which is outrageously generous! However, it lets her calculate the interest herself, which is great. It's also reinforcing the joys of compound interest.
Over the next couple of years I plan to move to her being responsible for more of the discretionary spending so she can make her own decisions. At the moment her pocket money is extra and I still buy her stuff - souvenirs, days out, presents for other people etc. I'd like to move that to her control gradually. One thing I do like is that she often spemds her money on other people, she has a generous spirit.
Generally, I talk to her about budgeting and will do more of this. We are very organised with this - we use YNAB and everything is managed carefully, although we have a very comfortable life and don't scrimp on anything really. It's taken a long long time to get to this point, though. I got awful financial habits from my parents and my husband grew up dirt poor with no saving habits. We spent years and years struggling with debts caused by our own financial mismanagement.
Like a PP said, I'm determined to teach my children better. To me it's one of the absolutely most important life skills I will give them - I don't want them to have to learn the way I did!
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