How did you learn how to handle money? Perhaps you’re still trying! Many of us grew up in households where the practical handling of money was something that was either too sensitive to talk about, or just that nobody thought about doing so. Unfortunately, you may know from experience that those who don’t learn about saving, budgeting and spending at an early age, risk years of playing catch-up on the mistakes they make as adults.
This is why, if you’re raising kids, making economic lessons part of everyday life is a better gift than any pocket money or trust fund alone. From the earliest age, children start observing and absorbing what’s going on around them in the home, from how to talk to hygiene habits to attitudes towards food. Money is no exception. The best way you can teach your kids to be responsible about money is to let them see you doing the same – and to be open and inclusive when you make mistakes.
This openness, however, is the bare minimum. Ideally, you will also put in place stages of learning in which you can actively encourage your children to cultivate the economic skills and habits they will benefit from in adulthood. The precise timing of these stages will differ from child to child, and you can adapt it as you go, but in general you can start the process around kindergarten age.
The first thing to teach is saving. Ask your kid what they want to save for, and have them draw it on front of an envelope. They can then add their pocket money to the envelope until they reach the target. Talk to them about timescales, and the basic mathematics they can use to think about when they will achieve their goals.
When they get a bit older, try letting them supplement their pocket money by making little bits of cash for household chores. This will begin to introduce them to the value of money as we use it today – and that pocket money won’t continue forever! It will also prepare them for the rest of their home curriculum: learning how to complete transactions in shops, how to budget, and eventually ideas about investment and different types of value.
It’s a long road, but making economic responsibility second nature to your children can save them a lot of pain and struggle when they’re older. Check out this new guide on how to navigate each step. Education, too, is an investment in their future!
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