5 ways to teach your kids about money

Have you ever asked yourself if your children are money smart? Do they know how to handle money sensibly and responsibly? Teaching children how to manage finances is a hugely important skill and a concept that needs to be introduced at an early stage, helping the next generation to develop good money practices before they reach adulthood.

The most important thing when teaching your children about money is to start early; research indicates that children begin to develop their money habits around the age of seven. Kids are incredibly receptive and when talking about developing healthy attitudes, in the same way you might start encouraging them to eat vegetables, you should start to talk to them about money and spending.

So I did a bit of research and found Qwiddle, an new online piggybank for children. I got in touch and asked Vanessa Cameron, the managing director of the company, to share a few tips on how to teach your children about money:

1. Talk about money at home – whether it’s around the dinner table or when you are out shopping, involving your children in conversations about money will help them to learn the basics about money and help them to understand it in a real situation. If parents are proactively trying to educate their children about money, they are likely to pick up good money habits as they grow up.
2. Understand the value of money – The more children interact with money the more they will learn and understand. If children can see the value of where money comes from, how it is earned and the importance of saving up for things, this will aid them for more conscious spending when they are older. Pocket money is one of the first things which can be used to help children develop an understanding of money. Creating independence empowers children to appreciate that choices have to be made when it comes to spending and these choices will have consequences, be them good or bad.
3. How to earn money – encourage them to think about how to earn extra money to reach their goals, starting with jobs around the home. How many tasks during the week do we repeatedly ask our children to do – hang your coat up, tidy up the toys, clear the dishes away, do your homework! See if they are mature enough to take on one or two jobs throughout the week and be rewarded with a small payment. My children earn their pocket money and phone top ups by doing jobs around the home which educates them on the value of money.
4. Budgeting and setting goals – children need to be encouraged to create goals, learning to prioritise and think about things they really want, rather than spending money on impulse buys. Parents need to help keep them on track, especially when they’re in a shop and tempted by the goodies on offer. So when they say “Mum I really want that!” they need to be reminded of their original plan. A few tantrums may ensue, but once they reach their milestone and actually get to buy their item they will learn the valuable lesson that effort and persistence equals results.
5. Taking responsibility – as children mature allow to take responsibility for their own money. Let your child plan their own monthly budget; as they mature so does their spending – moving away from just purchasing items for fun and moving towards items and services they need. By letting them make choices they will also have to live with the consequences, sometimes good, sometimes less so. As responsible parents we must help our children become involved, better that they make mistakes with small sums of money than with thousands of pounds as adults.

Qwiddle is a free tool that enables children to learn about money in a secure space. They can set goals for things they really want and parents can set tasks so they can earn extra money towards their goals. It uses the PayPal system and parents monitor and control any spending on the account, making it an effective and reliable method of teaching children about money. For more information and the latest money lessons visit the Qwiddle blog.