One of the most important lessons in life is the value of money, but teaching your children the value of saving and sensible spending can be challenging.
To make it easier for you, here are the top 5 tips to teach your children how to handle their money:
1. Teach them young
Teach them well and early, so they learn the real value of money. As incredible as this might sound, adult money habits are set by the age of 7 (Money Advice Service, 2013).
The key to success in teaching money management to your children is to tailor the lessons to their age and to make money the topic of family discussions.
2. Make it fun
Introduce the concepts of delayed gratification, haggling and value in an enjoyable way. Run a pretend shop at home, ration sweets, help them to set up a stand to sell lemonade, encourage them to save their weekly allowance for a bigger prize…. Talk about saving versus spending with your children, but don’t get all serious or you’ll get rid of the joy.
3. Help them understand the difference between wanting and needing
All children ask for the latest hot toys. Make them understand the difference between needing and wanting to motivate sensible spending decision-making from a very young age.
Lead with the example by not spending more money than you have. After all, children learn from your actions.
4. Set a family savings goal
Work as a team to save money for your next holiday/day out/family gift. Set a long term goal, start a fund jar and encourage all the family to save together as a team, bringing fun into the idea of saving towards a desired goal.
5. Allow them to learn from their mistakes
To learn the real value of money and how to make smarter financial decisions, you need to enable your children to make their own mistakes. By experiencing first-hand the highs and lows of saving, your children will understand the real value of money.