How do you teach your children about the value of money?
According to research carried out by icount recently over 40% of parents surveyed felt that children should be taught the value of money between the ages of 5 and 7.
Personally I think you need to start even sooner. From a very early age we’ve talked about the value of money to our children. For example, if they want a treat from a gift shop at the zoo we might explain to them that there isn’t any money for the gift shop as we spent lots of money on the entrance tickets or, if we’re feeling a little more flush, that they must choose between an ice cream or gift shop money. This makes a clear point that you can only spend your money once. Mummy and Daddy don’t have a free flowing stream of money (if only) and we have to make decisions about what we want to spend it on. Giving them choices about how money helps them to understand how you must prioritise what your funds are spent on. It also means that we rarely have tantrums or strops if we say we can’t or won’t buy something – they just understand that the money isn’t there.
Last summer we had our first family holiday abroad and we were often heard to be saying “We can’t do that as we need to save all our pennies for France” or “Yes you can use your money to buy those sweets if you want to but then you won’t have any spending money on holiday”. We were intentionally teaching Ben and Chloe in particular, that you need to make sacrifices to save up for something you really want.
More recently we encouraged Ben to save up to buy his own bike. Of course the £70 or so we spent on his new bike is a lot of money to save at 6 years old so as an added motivation we told him that we’d pay half. If he could save up £35 for his bike, we’d pay the other £35 for him. Through a combination of saving up money from his grandparents, the tooth fairy, doing jobs around the house and even the odd penny or two from Grandad Joe, he saved up his half in around 6 months. He had to work hard for his bike and he was so proud to have paid for it himself.
Clearly, teaching children about the value of money isn’t just about learning about how much things cost, though again this is something we talk about often. Ben in particular, at 6, is able to understand when I tell him “The tickets for this pantomime were really expensive, they cost more than your new bike” and I do think it gives him an increased appreciation of how expensive things can be or how hard we have to work to provide them. When he asks to buy something naff in the supermarket and I tell him that for the same money he could have a box of LEGO he soon changes his mind about where he wants to spend his money!
Interestingly a large number of parents surveyed felt that the best way to teach children about the value of money was to give them their own pocket money. This isn’t something we actually do yet as I think our children are still too young, however having responsibility for a small amount of money certainly does give them the opportunity to learn about saving, budgeting and managing their money. I remember in my early teens getting the bus into York with friends and writing lists before I went of what I would be spending my money on – the bus, a sausage roll from the bakery, a new top. I was already learning to budget. (Unfortunately it wasn’t really a lesson that stuck into early adulthood). As a teen, my Dad would pay me my pocket money by monthly direct debit – mainly because he would forget otherwise but also because making your money last all month is a good lesson to learn for when you join the working world. Both Mum and Dad were keen that we were never allowed “subs” – if we had run out of money, we had to wait until our next pocket money was due. There was never any borrowing. Again, a tough lesson to learn and one which I wish I’d internalised more!
I’d love to know how you teach your children about the value of money? Do they have pocket money? How do you encourage them to save?