Children who are good with money usually learn these skills from their parents or carers. Letting your child spend and save money from an early age helps them develop the skills to make smart money choices both now and in the future.
Talking to children about money can be difficult
We want our children to grow up feeling confident about managing money. But it can be an emotional topic, especially if you’ve had your own issues with it or feel you would say the wrong thing.
But you don’t have to manage your own money perfectly to be able to teach your children good habits. You just need to decide what you want to teach them and keep it simple.
Be open about your money
Discuss:
- where money comes from and what you use it for
- how to make good choices and learn from their mistakes
- the benefits of saving
- how to make choices about what to buy with the money they have
- the difference between wants and needs.
When should I start talking to my child about money?
Our skills relating to money begin to develop between 3 and 7 years of age with habits starting to form by the age of seven. They learn from what they see you do, so starting early helps build good habits. It's a good idea to talk to your child about money as young as three.
This will help them:
- get the practise they need – children need time to learn how to manage money, it's a gradual process. They learn best through small steps and real-life experiences with money
- learn from their mistakes – for example, if they spend all their money on sweets and can’t afford a new toy, they’re learning reasons to save but, in a situation, where the stakes are low
- avoid bigger money problems later in life – when decisions involve larger sums and mistakes can have more serious consequences.
Your role in your child’s attitude to money
Parents can play an important role in children's behaviour towards money. Whether it's budgeting, saving, or investing, involving your child in these discussions and decisions not only teaches them valuable financial skills but they're more likely to come to you with their own questions on money matters.
Your child can also learn about money from different people like grandparents or friends, as well as from ads or social media. Use this chance to talk to them about why people handle money differently.
Understand how children see money
Children (like the alien) don’t understand what money is and how it is used unless it is explained to them. Ask your child:
- What do they think money is for?
- How do they think it is used?
A little bit of preparation goes a long way
It can be hard to know how to start a conversation about money, so it’s worth thinking about what you want to teach your child. This doesn’t have to be complicated — you could just decide the basic points you’d like to get across and the values or attitudes towards money you think are important to share.
It’s also worth identifying what’s important to your family right now.
Get children involved in your money decisions
If you’re saving up for a holiday, write a list of some of the things you’re cutting back on such as:
- meals out
- trips to the cinema.