Tips on Teaching Children about Money

As parents, we teach our children all sorts of things and that learning is supplemented by school. However, there are some areas which tend to be forgotten and one of those is money and finance. Although, there is some teaching on the curriculum it is not very much and so children may need parents to guide them in this teaching.

Set a good example

It is a good idea to set a good example to your children with regards to your finances. They will notice your behaviour and copy you. Therefore, you need to be careful with what you are doing. By showing them good habits, you will be helping your own finances too. So, make sure that they see you budgeting and not overspending, that they see you saving and repaying loans on time. It can be good to explain to them what you are doing at times and why you are making particular spending decisions. So, if they want something and you do not want to buy it for them explain why. Do not just say it is too expensive but explain that you only have a certain amount of money to spend each week and if you buy that item there will be nothing left to buy food. Overexplaining this will start them thinking about budgeting money even at a young age.

Get them a bank account and money box

It can be a good idea to set them up a bank account when they are very young and get them a money box. Then if they have any money you can show them how to put it into a savings account. Teaching them how to look after their money and not always to spend it can be very handy. Knowing that you can save up for things and that you do not always have to spend can be very useful. There are some adults that spend all the money they have because they have just never been shown that there are benefits to saving money.

Teach them about savings

It is good to help them to understand that if they have savings then they will get paid interest on them. They should be able to understand that there are advantages to keeping money in a bank. It is also good to explain to them that there are other benefits too as they can save up for expensive items and they have money to fall back on if they suddenly need to buy things and do not have the money.

Teach them about debt

As they get older it is wise to teach them about borrowing. Make sure that they get a balanced view and understanding of good and bad debt. It is important to understand the ways that debt can help us as well as the problems that it can potentially cause as well. Many youngsters will grow up with a fear of debt which may stop them from getting a loan and going to university or stop them from getting a mortgage and buying a home. While it is important to be cautious it is also so important to realise the importance of borrowing money.

Teach them to budget

It can be a really good idea to teach children about budgeting. There are often opportunities to do this if they want to buy something and do not have enough money to do so. If they get regular pocket money but always spend it all on something but want something else, you can teach how they can reduce their spending in one area so that they can afford other things or that they may need to save up their pocket money for a while to afford what they need.

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