I have always believed it is vitally important to teach children the lesson of how to look after their money. I need to be more careful about looking into this now, I realised the other day when my son asked for something and I said I didn’t have enough money, he responded with “get the bank to give you some”. I suddenly realised he saw money as an unlimited resource which just appeared from the bank.
So many people are in debt these days and many of these are at levels which they cannot cope with. Now is the time to teach our children to look after their money before they have to handle their own finances.
I have a fairly large credit card (you should always keep your credit card at least 10% under the max and mine is not) and that is the only thing bringing my credit score down, I have never missed a finance payment or anything like that. The tool below showed that over the life of my mortgage my reduced credit score has lost me around £35,000 (this is mostly due to the different mortgage rates you can get if you have a better credit score, this isn’t the only thing which is effected by your credit score but it gives you a good idea of what this small thing does to your finances). Here are a few ideas I try in order to teach my children about money:
At the weekend I give them their pocket money, they each put 50% in savings and we head to the car boot sale with the rest. They are allowed to spend it on whatever they want but that is all they are allowed. They very quickly learnt that it is item A or item B, not both. They also now bring a bottle of water and a snack with us, otherwise mean Mummy makes them buy it from their own money.
My children are saving their own spending money for our holiday this year (Daddy has said he will double what they can save). We will use the same idea when we are away, they can spend their money on whatever they want, but they are not to beg for more once it’s gone.
When shopping I always show the children how to work out what the cost per item, or per 100ml etc of each item, then they can see that for eg a packet of 4 chocolate bars at £1 is a better deal than 1 chocolate bar at 60p, even though it costs more. My kids often buy the bulk pack and split it between them, thus paying less for 2 than it would have been for 1.
Lead by example! I try to show them how we budget weekly money and avoid impulse buys in the supermarket.
We are trying hard to pay off our debts and get our finances under control, hopefully the kids won’t make the mistakes I did. What methods do you use to teach your children about money?