If the cost of living crisis has taught us anything, it is that we need to keep a keen eye on our finances. And, although there is a commitment to teach children maths until the age of 18, they might not always learn about all of the practicalities of money at school. However, as parents we can help prepare our children for future life by telling them what they need to know about money.
We have put together four important aspects of finance that will help your children in the future.
Things children should know about money
1) Basic money language
Incorporate money management concepts. You might get the kids mowing the lawn or doing household duties, but you could also try adding something more financially orientated to their chores, like helping with a weekly shopping budget.
Done in a positive, age-appropriate way, this could help them become familiar and confident with some basic money language.
Being open and discussing finances during family dinners can also be helpful – children are naturally inquisitive and will likely ask questions or at least passively soak up information. Especially if they have heard about money matters on the news or social media.
For something more structured, there are online courses aimed at teens that teach money basics, and financial influencers on social media, although make sure you introduce them to content creators with decent credentials.
2) How to save for things they want
Saving is an important life skill and something children should definitely know about money. Instilling this early can empower children with a sense of independence around personal finances and earning power.
You can even spur them on by offering to pay for half of the item they want if they manage to save up half. Of course, not all households will be able to do this, especially when living costs are stretched. But teaching kids how to save, however possible, is still useful.
Encourage them to put, for example, 25% of their pocket money, earnings or birthday money into the savings account. ‘Encourage’ is the optimal word here, though. Enforcing it could lead to resentment and that could damage the point you are trying to make.
3) Negotiation skills
Handling money is important for children to understand, but so is holding their own in the working world when it comes to pay negotiations. Instilling and encouraging kids to not be afraid to ask for pay rises and promotions will help them in employment later.
So, how can you model this early? If you are rewarding good report or exam results, ask them to tell you how much or what that achievement is worth and why. Or, for pocket money for chores, ensure they are earning their ‘fee’ and do a pay review each year. Ask them to make a case for a raise in pocket money.
4) Virtual money matters
Cash is no longer king. The trend was already there, but the pandemic sped it along. So one major thing kids should know about money is how it works in a virtual world.
Show them your online banking (if you don’t mind them seeing) before you make a purchase with your card or phone and then show them afterwards when it has exited your account.
Use the example of video games, where they often play for coins or credits in order to gain upgrades. Factor that into their chores. The more they do, the more credits they earn, which they can exchange for treats or snacks.