From birth to 18: practical financial lessons for your child

Teaching your children all important financial lessons as early as possible is a sure fire way to help them as they enter adulthood.

When I was younger, school taught no real life skills like how to change a plug, change the oil in a car or how to balance a budget. However, it’s not all about school. Your first lessons in life come from what your parents teach you. Although my dad taught me how to change a plug, money was not really mentioned.

Time has sure flown by since I was a kid and education has changed with it. In secondary schools, financial education is now part of the national curriculum and teachers have to deliver lessons about money to our children. But this shouldn’t stop parents from starting financial education at home and teaching kids about money.

In fact, I feel slightly sorry for teachers. They study for a degree in a specialist subject, go on to do a teaching qualification and then start teaching their subject. For a maths teacher to cover personal finance in their lessons is ok, but to ask a history, PE, English or music teacher to deliver a class tutorial on pensions?! They have not had the appropriate training and have been flung in at the deep end. There are only a few resources out there and much of the country thinks it’s down to them to help this generation.

Financial lessons at home

Just as we teach our kids to clean their teeth and eat a balanced diet to stay healthy, we should also be showing them how to save money, pay a bill or work out tax so they can have a healthy bank balance.

If my kids don’t get a financial education and learn to appreciate money, I am worried that they will follow in my miserable financial footsteps. I fear they will make many mistakes – which would take years to overcome.

It’s not even about them entering the big bad world alone. They need to know about money well before they before adults otherwise things may turn out bleak.

Making money a habit early will ensure isn’t a challenge and is a normal part of life.

The thing is not all financial lessons are going to be appropriate to all ages. There is no way my four year old will sit down long enough for me to explain how a savings account works and trying to explain retirement planning to my 16 year old is “such a bore, dad!”

If you’re stuck for ideas of what to do with your kids to teach them about money, then how about some of these:

From birth to 3 – learn to count

Yep, as early as day one! It may seem extreme thinking about financial education when your kid is still in nappies, but the thing is you’re probably already doing it. Counting is a must when it comes to money and it is a major step all things financial so practising early on will help your kids.

4 years plus – counting coins and bank accounts

At about this age, most kids should have a good grasp of counting. They should be able to recognise most numbers so introducing money and money games fits in quite well.

We are avid change collectors and, although you can get coin counting machines in banks, we try to get the kids to help with counting. They look at the coins and sort them into the same values. Our youngest is able to count the pennies and as our children have got older their timetables have helped counting larger denominations. Obviously we wash our hands after!

Also, now is a good time to open a child’s bank account (and take them along) to save all the coins you’ve been counting. You may already have a savings account on the go but you can explain to them that the bank account is for saving their money but also for spending. As they grow, their account will change from a bank book, to a cash card to a chip and pin so they will learn how things change. Plus, they’ll be so excited when they get post in their name, which is another excuse to talk about their bank account each time mail lands on the door mat.

5 years plus – chores and earning money

If you give your kids a weekly or monthly allowance why not make them work for it? When our kids get even older we’ll suggest (nicely) that they get a part time job so this is a good way to start teaching them about income.

My kids have chores. For us, my youngest sets the table before dinner. For the older one, she helps with taking out the recycling and bins on rubbish day, dusting and washing up (although she’d swear to a judge she does a whole lot more!)

Rather than just giving the same amount of money each week we say that each chore is worth a different amount. Recycling is 50p, helping with washing up for the week is £1 etc. The kids can then choose to help (or not). If they do some chores they’ll get some pay, if they don’t do others then they’ll get less.

There are loads more ideas here of how to make money as a kid.

6 years plus – paying for shopping

More and more, I let my kids have some money in shops to pay for items. It has given me a chance to talk to them about the differences between paying by cash and by cards.

It has got my kids used to the idea that they need money to buy stuff and I explain that they’ll get change back. As the children have got older, I’ve made them work out what change they’ll get back.

It’s also a chance to read the shelf labels and price tags in shops to see what items are worth.

To learn about pricing differences, it’s also worth buying a high end product one week and a supermarket basic item the next. Each week let your child try the item and make comparisons. Does the more expensive one taste better or do more? Could the cheaper one do the same thing for less?

7 years plus – help with the food shop

Money comes in and money goes – that’s an easy thing to teach kids. The supermarket spend is one that could go up, and up, and up quicker if we didn’t keep a reign on it. If the kids had their way we’d be broke but the cupboards would be full of junk!

Asking the kids to get involved with the food shop will help them understand how quickly money can get spent.

We create a shopping list and I ask my children help find the costs so we can budget. Using supermarket websites, they find the items and work out the prices. It’s not just a case of adding up a big list of numbers when they’ve got them all. As they are finding out how much things are, the treats they ask for regularly can now compared to the cost of other things. For instance, a pack of Peperami’s can cost just as much as one whole meal made from scratch.

9 years plus – get saving

The “I want, I want, I want” phase never stops! With one advert after another selling our kids the latest flash shoes with wheels, or toys with bells on, or whatever else they’re peddling at the time, the list of things they “need” doesn’t go away.

The problem I have is that I hate saying no to my kids. I have to and I do but that doesn’t mean I like it. Instead of saving no I say, “you don’t have enough pocket money to buy that. What could you do to earn more money?”

What usually follows is a moan but then I can see the cogs start working. My daughter then considers what jobs around the house she could do to earn a bit more money. She also starts to think of other ways to boost her income. Does she have any old toys or books or clothes that I could list on eBay for her?

By making sure my kids save their money, rather than splashing the lot in one go, I’m hoping they will not get suckered into impulse buying later in life.

11 years plus – budgeting vs spend, spend, spend

Approaching secondary school, financial lessons will now be taught to our teens and young adults while at school. However, it’s still always worth continuing to talk about money at home.

We’ve been very open about how our finances work. We hope that our children will have a clear idea of where money comes from and how not to spend it too quickly.

As they get older, here come trickier conversations:

“But ALL my friends have one!”

“What EVERY friend?”, I ask,

“Yes dad, every single person I know has a phone. It would be SO embarrassing if I didn’t have the absolute latest model. And I need a billions texts and loads of data…”

I’m sure familiar arguments conversations have taken place up and down the country for a variety of things. The mobile phone is probably taking over as a must have on every teenager’s list. As well as the mobiles, requests for cash for a trip to the shops with mates is also asked a lot. A response of “it’s not in my budget” gets a dead look back.

To help, I’ve been sitting down and showing how we work out our budget. If we add the cost of a mobile phone to our budget, will it blow things or can we afford it? Doing this has given our kids appreciation of how much bills are and how much money we have left. They can then be more understanding of why we sometimes have to say no.

If you have a sales-hungry teenager, working out the price of discount sales items is one game we play a lot. How much is that top if you can get 20% off as you may have enough money, after the discount?

Be fun and engaging 

There is no proven way to teach everything money. Each child is so different that only you, as a parent, know what’s best and most appropriate for them. Really, anything you can do that is fun and engaging will help them as they get older. If you’re running out of ideas that work for you, check out the Young Money website where they have loads of downloadable resources to help.

Financial education and learning about money should just be second nature. Making sure our children have a head start will go a long way in helping them avoid money issues later in life.

What do you do, or are planning to do, with your kids to teach them all important financial lessons?