How many times have you caught yourself cursing the antiquated education system here in the UK as you survey your bank statements with bemusement?
”If only they had taught us this in school” you mutter, as APRs, ETFs, FICOs and GAAPs confuse the life out of you.
This only feels more pertinent in the midst of a cost of living crisis. Because as it stands, it feels like many young Brits are spat out into the big wide world with only a rudimentary knowledge of finance.
And sometimes, such ignorance can do lasting damage to our finances in the first few years of independence, as we make some truly naive money moves, oblivious to proper budgeting, investing in stocks, balancing the books and staying alert to the threat of fraud.
Indeed, if the whole point of school is to prepare students for ‘real life’, then education falls woefully short when it comes to helping us learn how to manage our finances. As a result, many people reach adulthood without really understanding the importance of their financial health.
If this is chiming with you as a parent, then perhaps it’s time to take matters into your own hands and do a little homeschooling where such life lessons are concerned. With that in mind, here’s a short guide on how to teach your kids about money and help them develop healthy financial habits.
Introduce Your Kids To The World Of Finance Early
It’s one of the only things that financial experts across the world seem to have reached a consensus on; it’s never too early to start teaching your children valuable life lessons about finance.
Indeed, according to the investor Kevin O’Leary via CNBC, ‘’by the age of six, parents should already be talking to their kids about finances’’. He doesn’t stop there, going on to say that even by the age of 3, children should understand some basic financial concepts .
He suggests that, aside from fostering a ‘’positive connection’’ with money from a young age, parents should help their children understand the notions of debt and interest, specifically. Doing so is ‘’the greatest favor ever in their lives’’, he adds. Well, we’re sold…
Explain To Your Kids The Difference Between Wants & Needs
Alongside those more concrete financial concepts, it’s also essential to help your child understand the implicit and explicit differences between ‘wants’ and ‘needs’, which will, in turn, foster a greater grasp of the value of money from an early age.
A great way to teach this lesson first hand is at the supermarket or grocery store. With your child, compare the price of fresh fruit and a supersized chocolate bar, or juxtapose a bottle of coca-cola with a carton of milk; in doing so, you can explore the relative value of money relating to ‘wants’ and ‘needs’ together.
Go further, and encourage your child to pay the bill in the cafe or the store, bestowing in them a sense of responsibility and trust.
Read: How to plan for a responsible financial future
Make Learning About Money A Fun Game
So far, so dry. But as we all know, children learn best through play, so it’s a good idea not to keep your teaching too conceptual. Instead, develop games, activities and challenges centered around money in a fun and interactive way:
- Establish a play shop or cafe at home, and use real money when roleplaying customer and shopkeeper.
- Play a counting or adding up game using stacks of real coins (it’s more fun that it sounds, honestly!).
- Before breakfast, lunch and dinner, roleplay being in a restaurant, with a mock bill drawn up at the end of meal.
- Add small price tags to toys, and help your kids understand how to add up to that amount using coins and notes.
- For the older ones, try board games like Monopoloy and Money Bags.
You can also harness the power of tech to help make learning about money fun. There are various computer games that offer subtle lessons in financial management whilst being super fun at the same time. A few favourites from our youth include Sim City, Theme Hospital and Rollercoaster Tycoon!
You could also consider allowance apps which even make doing the chores seem fun. Several platforms have come out in recent years where parents assign chores, which, upon completion, earn the child their allowance, all facilitated via an app.
Combine this with your kid’s first credit card (all with parental controls attached, of course), and suddenly, learning how to be financially responsible, doing chores, and having fun are all working symbiotically.
You could even give your child a small allowance each month to invest, sitting down regularly together to track how the investment is going, in the process learning about speculation, risk and reward, and how to read graphs and tables.
Encourage Entrepreneurship
It is also important to encourage children to be creative, to let their imaginations run wild, and to work on projects that they’re passionate about. And if they can turn those projects into profit-making ventures, then all the better!
Awaken the young entrepreneur in your children by fostering a sense of both drive and gratitude in their small wins, by helping them run a lemonade stand or cake stall, setting up an account together on a marketplace app like Depop or Vinted to sell their old clothes, or taking a tour of your neighbourhood as a team, offering to wash cars or windows. Every little helps, as they say, and every lesson learnt on this journey will be so useful for your little one.
Volunteer In The Community Together
Of course, the last thing you want is to bring up a young, money-hungry plutocrat. It’s vital, then, to balance these explorations of finance and money with wider life lessons about the importance of community, generosity, altruism and a shared societal spirit.
Volunteering in the community is a wonderful way to nurture all of those qualities we just mentioned, and there have been a number of studies suggesting life satisfaction and overall well being may be improved through volunteering, with many charities and community organisations offering the option for families to do so in a group.
Some of those include the National Trust, The Conservation Volunteers, and the RSPB, although local groups offer a wider scope of opportunities.
In doing so, your children will cultivate compassion and kindness, which is arguably a greater life lesson than anything concerning incomes, expenditure, budgets and book-balancing.
If you’re keen for more of the same, then check out these tips on the top ways to support your toddler’s growth and development. From learning through play to loving nature, there’s plenty to unpack here.