When it comes to teaching your children about money there are some lessons that can’t be taught in the classroom. During global lockdown, this may be a good opportunity for them to learn about managing their finances.
1.Budget to save
Today’s school-age children are facing a long wait to get on the property ladder and to retire. We recommend getting them into the habit of saving and budgeting as early as possible, so they are prepared for these milestones.
2. You only spend it once
Children need to understand the value of money. There are now apps and prepaid cards that can be used for purchases and monitored by parents. This will gradually introduce them to an increasingly cashless society.
3. Needs vs wants
It is important to help children decide when to spend now and how to budget in later life.
4. Money is earned
Don’t give pocket money without requiring your child to do something for it.
5. Save to give
Children are naturally generous. Being able to give some of their pocket money to charity may be an incentive for them to save more.
6. Paper vs plastic
Just because you can’t see the money when using a card, it doesn’t mean that it isn’t being spent. Explain the difference between a credit and debit card and how the money in a current account is just like paper money.
7. Keep half, spend half
A good mantra is, “keep half, spend half. This is something children can apply now, as they do not have the large outgoings adults may have. If they carry this principle into adulthood, it will transform their life financially.
8. Avoid peer pressure
Stress the importance of making healthy choices with money and life in general. Look at social channels and point out how things are manipulated, how ‘influencers’ are paid to sell products.
9. Compound interest
Described as the eighth wonder of the world by Albert Einstein. It is important to teach children about the effects of compound interest.
10. Prepare for the unexpected
The latest virus pandemic has shown us all how important it is to have savings for a rainy day. Building on good financial health helps deal with all types of events both good and, not so good.
By Philip Harper | April 2020