It’s often said that kids aren’t taught enough practical skills in the British school system. Though they’re thoroughly versed in finding the hypotenuse of a right-angled triangle, many young people leave school without knowing how to balance an account – a skill they’re far more likely to use in the average working life.
It’s no wonder that today’s youth spend time on TikTok learning financial skills (as well as innumerable trending dances). But when it comes to developing their monetary habits, their key influence remains closer to home.
According to a survey taken as part of The London Institute of Banking and Finance’s Young Person’s Money Index 2021-22, over half of young people say that their parents are their main source of financial understanding.
So, what are parents to do in order to live up to this responsibility? We’ve written this short guide to answer this question. Read on for four tips to help your kids develop healthy money habits.
Teach them how to save
Good financial habits don’t come naturally – we all have to practice how to be good with money. That’s why it’s a good idea to open up a children’s savings account for your child while they’re still relatively young. This will help them learn essential financial principles such as:
- Only spend what you can afford
- Plan for the unexpected with a reserve
- Make your money work for you by gaining interest
Make them earn
The oft-repeated phrase “money doesn’t grow on trees” really hits home in adult life. But it’s a hard lesson that’s best learnt early on. You can teach it to your children by making them work for their pocket money.
They don’t necessarily need hard jobs, just ones that teach them that money is the reward of value provided. Scale the jobs according to your child’s ability and level of responsibility.
Make it interactive
Children tend to learn better in proportion to their involvement with an activity. Taking them shopping is a brilliant way to involve them in financial activities on a weekly or monthly basis.
You can give them their own budget and let them pick out their own snacks, teach them about complicated discounts or deals, and even let them pay at the cashier to help build their confidence.
Set a good example
As many parents love to remind their children, actions speak louder than words. So, it isn’t too surprising that children prefer to do as their parents do, rather than as they say.
Accordingly, be sure that you’re emulating the financial habits that you’d like to see your children pick up. By doing so, you’ll be the role model that your children need in order to develop healthy financial habits effectively.