Financial management

Six tips for teaching your children about money this Christmas

- December 16, 2021 3 MIN READ
it's important to teach your children about money

Learning how to handle money from an early age is a wonderful skill to teach your children and Christmas provides the perfect opportunity to give them their first lesson according to Salman Haqqi, personal finance expert from money.co.uk.

Creating an environment in which you are able to speak more openly with your children about your financial decisions is vital for engaging them from a young age on the value of money,” says Haqqi.

“Showing them how to make choices when shopping for Christmas presents and what they can do to save the money they may receive as gifts, will set up good managing habits.

“It’s important to make sure your lessons are age-appropriate and that you continue to involve and teach your children about money as they grow. A healthy relationship with finances starts at a young age, and children learn most of their habits from their parents.”

Six top tips to teach your kids the value of money

  1. Speak openly about small financial decisions 

Start involving your child with minor financial decisions, such as deciding which brands and items to buy when shopping and opting for products that will last a long time. This way your child will be able to understand the decisions you make while also feeling in control of certain financial choices they make.

Older children could also help with budgeting while shopping this Christmas if you ask them to keep a running total of the items you buy. Not only will this help their maths skills, but it can also help them to understand how small items can still add up in price, demonstrating that not everything is affordable on a budget.

  1. Set a good example with your own finances

There’s no two ways about it, children learn money habits from their parents. Showing them small activities such as checking the receipt after your shop or putting money into savings can start developing positive habits from a young age.

Encourage your child to ask questions without repercussion in this setting. While you might not necessarily have all the answers, opening up a dialogue is a healthy way for your child to learn more about finance.

  1. Use pocket money to teach children how to save

Alongside teaching children the relationship between work and money, any pocket money earned through household chores or Christmas gifts can present a great opportunity to show children how to save. If your child has shown interest in a more expensive purchase, you could set them up with an old fashioned piggy bank where they can ‘deposit’ their earnings, or give them a chart to fill out so they can track how much money they receive or spend periodically (e.g. weekly, monthly etc.).

  1. Reward them by learning about interest

Paying small amounts of interest on the money your child has saved is a helpful way to encourage them to keep saving. Older children will be delighted to learn that the interest they earned last week can be used to earn more interest if they save until next week.

  1. Use trips to the shop to learn about saving vs. spending

Another practical way to teach a child about the benefits of saving is by visiting shops. Allow them full control of their own money on the understanding that if they don’t have enough they won’t be able to borrow any more. The more they feel in control of their own finances, the more they will be able to make sensible decisions when it comes to spending or saving.

  1. Use digital tools with older children

There are a whole range of online tools for teaching older children about online banking and using cards for both saving and payments. One of the leading products on the market is GoHenry, which is suitable for those aged six and up. It costs $3.99 a month and allows parents to set strict spending limits, monitor what their kids are buying and where they are spending their money.

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