Spending less and saving more is the third most popular New Year’s resolution for 2017. But why stop there? Financial planning company Lemonade Money is looking to help parents raise financially savvy children and improve your kids’ money skills this year.
Lemonade Money believes that it is crucial for parents to encourage saving as well as budgeting from an early age and if you believe reports from the Money Advice Service, there couldn’t be a better time for financial education. Financial habits are formed by the age of seven, so don’t leave it too long and teach your kids some important life skills.
Improve your kids’ money skills in 10 steps:
1. Get a toy cash register, some play money and everyday items such as cereals, kitchen roll or milk and play ‘shops’ with your little ones. It’s not only fun, it also helps them to understand the value of money and that the goods they use every day need to be paid for.
2. Playing ‘restaurant’ is another great scenario for some money education. Present your child with a bill after their pretend meal, count the correct amount of money or let them work out the change to show them that not only goods but services have to be paid for.
3. Cut out money-saving coupons together and play ‘I spy’ when shopping to see who finds the most discounted products on your shopping list.
4. Supermarkets are THE place for temper tantrums but don’t give into your child’s demands. While nerve-wracking, being consistent and sticking to your shopping list, teaches kids that money should be spent on ‘needs’ and that ‘wants’ should be saved for.
5. Get your kids a piggy bank and help them set a savings goal. This might be a toy, a payment towards a day out or something entirely different. The, discuss how saving money can allow them to spend it on something special in the long-run.
6. Reward good behaviour/helping around the house etc with a small sum of money. Use stickers as ‘currency’ and a chart to keep track of the total. This reinforces the understanding that money has to be worked for.
7. Older children may prefer a reward system based on digital games; doing household chores unlocks tokens which can be swapped for cash. Alternatively, the ‘chores’ could buy additional ‘perks’ (unlocked in digital games as levels progress) such as a treat, mobile phone top-up or meal-out voucher).
8. Improve your kids’ money skills by allowing them to take responsibility for their money. A pre-paid pocket money card is a fun and easy way to pay pocket money while teaching good financial habits. Go Henry, for instance, is an allowance card for between six and 18 that allows financial freedom while having the security of parental control.
9. If you haven’t already, set up a children’s savings account for your kids. It’s a fab way to show your children how the concept of interest works, i.e. as a reward for regular saving. Plus, the minimum payment of £5 a month really doesn’t break the bank.
10. Having a job and earning their own money can really improve your kids’ money skills. It does not only teach them money management but also skills like reading a payslip or paying money into a bank account – skills that apparently two-thirds or 16/17 year-olds don’t have. Always make sure, they have the right legal age for their job, e.g. paper-rounds, car-washing, flyer and leaflet drops (from age 13), working in a cafe/restaurant, hairdressers etc (from age 14) and babysitting (from age 16).
Improve your kids’ money skills and brush up on your own
As you can see, you don’t have to be a financial expert to teach your kids good money skills. Lead by example and help your children learn healthy financial behaviours. They are invaluable in later life and will help your children make better decisions once they leave the nest and have to deal with tuition fees, student loans, credit cards and phone contracts.
If you feel like your own money management isn’t as good as it could be, pop over to www.lemonademoney.com. On their website, you will find a free Financial Health Report tool that helps you understand how you can improve your finances. A Lemonade Hero is also on hand for those who could do with some additional support.