Teach children to be good with Money

[mamawho99]

I've always been terrible with money - Looking back I can see that this comes from my parents terrible parenting. They were always in debt, told me that loans were available if I was ever struggling with money, used to lend me £100-200 to spend on clothes when I was about 14 and would then take it out of my pocket money each week to pay them back so I would then have no money for months on end because I was repaying my "debt", told me that kids didn't need to know about bills etc as they should just be children and not know about "grown up" stuff. As soon as I got a part time job, my Dad took 3/4 of my wages each month to pay towards bills.

Anyway, I'm terrible with money and I can only assume that it stems from this.

I have 2 little girls and I really want to make sure that they understand their finances & understand the value of money & learn to save etc and not get in debt. Can anyone give me any tips on how you brought your children up to ensure they are good with their money? My eldest is 4 and I was thinking of maybe getting her a little piggy bank to learn a bit about money etc. but to be honest I've no idea where to begin. Any tips welcome.

I don’t think it’s just you. I think most people aren’t educated about money. I am terrible at saving. I was never taught, but I think we can change that for our kids.

One thing I’ve started saying to mine when they are given money is ‘how are you going to invest it’ rather than ‘how are you going to spend it’. I’m hoping they will start thinking about how money can grow over time and educate them that way. We all grew up with ‘how are you going to spend it’ whenever we get birthday money etc. and although we understand working and how much the cost of a toy is, it’s not the same as being a savvy investor. Will be interested in hearing how other money savvy people talk to their kids too!

I’m also talking to mine about long term savings for things like cars, houses, etc. it’s definitely had an impact on my ds who is now saving for a car (he’s 9!)

I think a big part is what we model. You say you are bad with money. I would consider what you can do to improve your financial management so you can model that.

Some things to consider if you don't already:

• Modelling equal spending throughout the month. Don't go spending lots near pay day and then struggle near the end of the month. (I appreciate currently a lot of people are still struggling even being sensible all month though)
• Considering the 'maths'. Lots of little amounts adds up. It's the classic 'if you buy a take away coffee every day it will cost £X over the year'. You might not be spending at that level, but there might be other things you regularly pay for because they seem cheap but it adds up.

Having pocket money, even if it is just a few pence, can help you model the value of saving. If you do that, I'd resist the idea of lending them money. Borrowing money is often not a good plan in life, so don't encourage it too much!

Mine had pocket money because they like to spend my money more freely than their own.

Give them a little purse, but if they don’t have enough penny’s you can talk about saving some for next week to buy X toy.

Open bank accounts and ask parents/grandparents to put savings in there.

Don’t overspend I’m birthdays and Christmas - make sure there is some for savings and a few toys - my daughter asked me yesterday if we have anything she owned when she was 5? She has a point - we own nothing from that time - clothes shoes toys bedding - nowt! Think about that when buying stuff.

Ask them to help sell things in EBay - they can watch things being sold and the money is theirs to save.

Give them jars maybe have one each for the family, ask them to count them - kids struggle to learn the value of money as it’s all cards and direct debits I bet a lot have never been in a bank!

You are doing the right thing and recognizing the issue is the start.

Pocket money from ~5 or 6.
Enough to spend on something but not so much they don't have to choose or save. Buy token presents for family at birthdays and Christmas so have to save for them.
No 'impulse buying' with things that cost more than a week or 2's pocket money.
Emphasis on saving for things, never buying on credit or using loans.
When they start earning, saving a good chunk of the money.
Not bringing them up assuming everyone visits costa or whatever a lot or have latest tech.

We got our son a go henry card. He has to do some jobs to earn some pocket money which he then can save for whatever he wants. It has made a huge difference to him as he used to constantly pester for things in gift shops or whatever but now he knows he needs to buy it himself he checks the price and will often say it's not worth it. I'd recommend it hugely.

I started keeping a "savings account" for DS1. At the end of each month I added 5% as interest for him, to encourage him to see the money mounting up. He's 13 and I've just had to put the interest down because he's saved so much it was costing me a fortune! So I gave him more freedom over the savings and increased his pocket money a bit to compensate. I have also now explained that real life savings accounts don't give you anywhere near that rate of return.

When he was really little just pocket money was helpful and if he wanted to save for something expensive we'd often give him a goal like you save half, then we'll pay the other half. They need to be achievable when they are younger otherwise they just give up.

Definitely give some sort of pocket money. You'll soon discover that your kids will spend their money less easily than yours!

If they ask for an ice cream, that must have toy, the bouncy ball they've just seen, a sausage roll... Whatever. Say "of course, get your money out and see if you have enough" ...9/10 they suddenly decide they don't want the impulse buy!

DH was given pocket money as a child, half had to go to charity. He’s still very giving with money.

I wasn’t a great saver op, so was determined to encourage this in my kids.

We started talking about money with our dc from say 3. We would say mum and dad both work, so that we have the exact amount of money we need.

Then if they asked to buy something we would nearly always say no and explain that we can’t buy things we like all the time as we have to make sure we have enough money for the important things.

Both got pocket money from age 6. Age 8 onwards go Henry cards. This teaches saving. They both currently have over £30 saved which means they have saved most of their pocket money for several weeks. Hopefully it’s working and they will be better with money as young adults than I was.

Give them a budget to buy presents for people at Christmas, birthdays etc.

Talk to them in the supermarket about working out the best deals etc, brands vs generic, costing out meals.

Be honest about affording things... so money needs to be used for electric, water, food clothes etc so we have to chose between zoo or theme park.

Encourage them to look after their belongings.

And finally... teach them about interest and not spending money on things you can get for free (such as physical pocket vs paid for bank cards...)

@Newuser82

We got our son a go henry card. He has to do some jobs to earn some pocket money which he then can save for whatever he wants. It has made a huge difference to him as he used to constantly pester for things in gift shops or whatever but now he knows he needs to buy it himself he checks the price and will often say it's not worth it. I'd recommend it hugely.

I'm not sure paying for a bank card is the most savvy way to teach your child about saving money, when most other accounts are free.

Have a look on Amazon on teaching your kids about money. I had one years ago and we had to draw a pie chart for the child to see what they were saving for, what they could spend straight away, known as chocolate money, I think it was ten per cent, what they gave to charity , what they saved for long term went into a junior isa. It took the impulse out of rushing out to spend. My oldest grandson is 14 now and is saving for a car and lessons, he's also got his first Saturday job.

I remember sitting with my mum while she 'did the housekeeping' which involved writing in a big ledger book her housekeeping money received from dads business, going through receipts to record everything spent last week in different columns for eg. food, clothes, activities etc, and total up what was left from last week, and count this weeks money and seal £5 or £10 notes into different envelopes for eg music lessons and to save for Christmas. These days the equivalent would be spreadsheets and transferring money to saving accounts. I was given a clothing allowance as a teenager to save for anything I wanted except school uniform and shoes. Also got involved as a cashier in a bank project at primary school.
I got a job as a teenager, saved successfully for things I wanted, chose my uni course to get a well paid job and have never spent beyond my means (though never been rich either- too cautious to speculate!)

@purpleboy for under 11s while it costs it’s a pretty easy way to show dc how online banking and cards work. Mine will get a normal bank account at 11.

[quote MissHavershamReturns]@purpleboy for under 11s while it costs it’s a pretty easy way to show dc how online banking and cards work. Mine will get a normal bank account at 11.[/quote]
Yes that's what we thought. It has a good app where we can see what he has bought and the jobs he can do to earn some more money. It suits us and him for now. He has just turned 9. We were happy to pay the £3 a month but obviously that is individual choice.

That will depend on the amount of money they get... ours get £2 a week so £3 a week would be 38% of their money... That isn't good financial sense. If they get £10 a week its about 7%.

Some really great tips on here, following with interest as I also want to teach my DDs!

One thing I wanted to add is that I'm quite careful with money and good at managing it but my parents never actively taught me this. It is purely something I learned from the behaviour they modelled growing up. So I'd agree with PPs who say that modelling the right behaviour is really important.

I think the most important money rule to remember is ‘it’s only your money once’. So obviously there are things we HAVE to buy so make sure you get the best deal on them/make the most of them. I can’t believe some of the ‘energy saving tips’ I read where people are just literally giving more money to Eon etc each month. Then there are the things we have choice over. I always ask myself ‘in 1 month’s’ time would I actually prefer this £10/29/100 was actually still in my bank account rather than Costas/Amazons etc. obviously sometimes the answer is no, and then I know it must be something I really want/need.

Once it’s gone it’s gone basically!

@Aroundtheworldin80moves

That will depend on the amount of money they get... ours get £2 a week so £3 a week would be 38% of their money... That isn't good financial sense. If they get £10 a week its about 7%.

Is that directed to me? If so the go henry card costs £3 a month. Not £3 a week. We wouldn't have paid that. If not the en my apologies.

[quote MissHavershamReturns]@purpleboy for under 11s while it costs it’s a pretty easy way to show dc how online banking and cards work. Mine will get a normal bank account at 11.[/quote]
Pretty sure there are other ways to do that without paying a monthly fee, regardless of affordability.

@Newuser82 £3 a week is a typo, meant a month.. since my children only get £2 a week (so £8-£10 a month) £3 is very bad value for our family. I was pointing out if they recieve significantly more than my DC, it becomes better value. Whether you consider it worth it is an individual choice.

I started giving mine pocket money from their 7th birthdays, when their maths could understand more about spending some / saving some / how long you would have to save to buy X, or how much you would have left if you bought Y, etc.

I used to give them money when we went to things like a Christmas Fayre, and reiterate that it was theirs and that was the finite amount. Re-explain every time they should go round all the stalls and see everything that they might want to spend it on, before using it all up on the first stall. Remind them they don't have to spend it - if they prefer, or if have some left, it is theirs to keep.

As others have said - modelling things....we have a charity shop on our High Street with a book room and they learnt early on you could get 6 or 8 books in there for the price of one at the Book fair at school, or, even better free from the library each week. Same with showing them where to buy sweets (supermarket or £ shop etc, rather than at the cinema or theatre etc.). All normal things to me, but when done with something they want, it makes sense that you can get more for your money in one place than another.

From when they were babies, I used to put any money they were given into their savings accounts as a default. Obviously as babies or toddlers they didn't have a clue, but even as they got older, birthday and Christmas they would usually have lots of presents / new toys / new clothes or whatever, so it wasn't usually a time when they needed anything else new. During the year they could have money out to buy things, but it wasn't a sort of "forced" - 'What do you want to spend your money on?' type of going to look for something to spend on, more a calmer, 'looking for the best deal on something they have really decided they want' decision.

Then, as they get older, and their 'pocket money' increases, or becomes an allowance, let them make decisions with their money about how important it is they have the fancier phone or named trainers or whatever it is they would happily spend your money on.

As well as that, general conversations in their teens explaining how much more you pay if you take out a loan for something rather than saving up for something.
All the examples about things like choices.....my (older) dc have a bit of a 'thing' in really disliking the bus, but the local train is much more expensive - up to them with their money......but then that translates into bigger savings when traveling as students and deciding between train, coach or Megabus.

I see lots of parents on the University boards saying their dc "needs" an en-suite room in University halls. With mine, I reiterated that is was their money they were spending, and, with a shared bathroom it meant they had an extra £45 per week in their pocket, oddly, they were all then happy without the en-suite.

It is very easy to spend other people's money.

@purpleboy if there’s any fee free way of an under 11 having a debit card please do share as I would definitely switch!

Just checked on Money Saving Expert and looks like you have to be over 11 for a debit card at the banks, so Go Henry etc is the way to teach use of debit cards under 11 if you have the money to spare and feel that’s a priority for your family.

There’s some kind of special offer on at the moment so it’s actually an MSE Best Buy at the moment www.moneysavingexpert.com/banking/cards-for-under-18s/#gohenry

But you can also just wait to 11 to avoid the fees!