Understanding the value of money is a basic life skill that your children need to engage in, no matter what their age. At around five and six years old, children begin to develop the cognitive skills to understand basic monetary concepts, such as identifying coins and count change. Equally, teenagers who are gaining control over larger amounts of money or even have weekend jobs, need to grasp a better understanding.
The experts at PIWoP are campaigning to help parents teach their children that things aren’t always ‘on demand’ and that there are financial benefits to patience over this ‘now now now’ approach.
Here is their money-saving advice for parents, as a guide to teaching children and young teens the value of money.
1. Teach them to save
Get your children excited by the idea of saving by purchasing them a piggy bank. They can then put all of the money you give them in their new bank - helping them grasp the concept of money more effectively as they can physically see it.
The main aim of PIWoP’s campaign is to teach them that not everything needs to be now. If your child tells you they want something expensive such as a book or big toy, help them figure out how much they need to save by setting a weekly goal.
Without this understanding of saving, your children might not be able to achieve their long-term goals of buying a car, going to university or purchasing their first home.
2. Set a good example.
When it comes to managing finances, your children will mimic your behaviour. If you’re the type of person who saves up to buy something then it’s more likely that your children will do the same. On the other hand, if you are quick to turn to credit cards when funding non-essential purchases, your children are likely to follow in your footsteps.
One way you can set the right example is by including your older children in some of your financial decisions, especially when they reach their late teens. This could include showing them how you shopped around to find a better deal on your current account, or sitting down with them to work out a monthly budget.
Sharing tales of the financial mistakes you made when you were their age will help to highlight the dangers of poor money management.
3. Start with a small allowance.
Learning to have responsibility for your finances should not be something that’s left until your children are fully-fledged adults with a job. You can help them understand this by providing them with an allowance each month. It doesn’t have to be a lot, just a small amount that would be enough to buy sweets and little goodies.
Then, the next time you go shopping with your children, encourage them to bring their money along in case they want to purchase something. They will most likely blow their first allowance and expect you to pay for the toy they desperately want - but here’s the first money lesson for them: they will have to way until their next allowance day.
4. Let them make mistakes.
Every parent knows how children get when they have free rein in a shop - it’s utter chaos! And this could not be truer when the kids have their own money to spend in the shops.
If they want to waste all their savings on a new Xbox game or cuddly toy they will only play with once, let them do it. This will help them realise that purchases should be considered and teach them the difference between short-term enjoyment and long-term investments.
If you want to read more money saving tips from the PIWoP team - creators of the only universal price-drop alert engine - take a look at our blog.