Why do we need to teach children about money?
Money is the biggest cause of stress, and stress is now being named ‘the killer disease’. You can join the dots. With the mounting pressures of modern-day life, it’s absolutely vital that we teach our children about money – and not just for their financial wellbeing. Mental and physical health is at stake too.
Recent research from Aviva Insurance revealed that 43% of UK adults say they’re still paying for financial mistakes they made in the past, and a huge 63% wish they had started learning about finances when they were young. There is also a growing concern for the future, with over a third (36%) of families worried about the impact of Brexit and Government changes.
With this in mind, it’s now more important than ever to prepare our children for what might be an uncertain future.
Teaching children about money early-on will cultivate a positive attitude towards saving and a mindful approach when spending, which can manifest itself in all aspects of life.
Louise Hill, co-founder & COO of pocket-money app goHenry, explains that “when kids grow up, they are going to be spending using a card most of the time.” As a result, “it’s more important than ever to help kids learn how to manage their money responsibly at a younger age – before they can make any expensive mistakes.”
Will Carmichael, CEO of a similar app, RoosterMoney, echoed this comment, adding that “44% of what we do every day is put down to habit, so cement those habits early on and they will stay with your child for life.”
When should we start teaching children about money?
It’s down to parents to decide when to introduce these concepts, but as Carmichael suggests “the earlier you start the better! Children have an incredible ability to absorb concepts.”
Both Hill and Carmichael highlighted the positive effects of getting children involved in finances as soon as they’re able to understand. For example, asking them to pick out best-value brands while food shopping – as a way of introducing the concept of ‘good value for money’. These small tasks are opportunities to have “a positive conversation about money” and develop a healthy attitude.
How can we teach our children about money?
- Talk openly about money. Carmichael says discussing money “in an open and fun way can
create a really healthy attitude amongst the whole family.” So, if parents make a mistake, such as receiving a parking ticket or missing a bill, it’s worth talking children through it and discussing the solution.
- Involve them in day-to-day finances. Both Carmichael and Hill suggest to: “Get the kids involved in the budget for the weekly shop, show them the utility bills when they come in and challenge them to find a better deal online. Have fun talking about what you want to save up for, and make a plan to get there.”
- Help them plan and set their own saving goals. Children will notice when their peers get a new toy or clothes; this provides opportunities to help the child set their own saving goals based around their pocket money.
- Teach them about modern-day money. Hill explains that “cash pocket money just doesn’t work for families anymore. Kids want to download music – and they need to get to grips with the concept that although no money passes hands, these downloads still have a cost.” It’s important that children understand the “non-physical concept of money as soon as possible.”
- Reward positive financial decisions. Providing children with incentives to make positive financial decisions, such as saving pocket money instead of spending it straight away, they’ll develop practical money habits that’ll benefit them later in life. “This doesn’t need to be complicated or even expensive, it can start with a basic ‘gold star’ reward system at the age of 4 before progressing onto money itself,” suggests Carmichael.
Ensuring your child has the best start in life is every parent’s priority, but it’s preparing them for those unexpected challenges that will drive success when it comes to their wellbeing and finances. Carmichael explains how: “Life isn’t linear, there are lots of ups and downs, and it’s teaching your child how to deal with those challenges that will give them confidence with their cash.” This confidence helps nurture a financial and emotional stability whilst dissolving the root cause of stress.
So, if you can’t buy happiness, you might as well learn it.
Article by Alice Budd