There is not enough financial education taught in schools so it is up to you to teach your children about money. Teaching children these 5 top tips about money at a young age will build firm foundations that they can build on over time. One of the hardest things in my job is trying to bridge the gap in financial education from my generation who were taught no fundamentals at all and this leaves people more exposed to sales tactics and debt exposure.
Give your children a great gift and a great start in life by discussing money with them, here are 5 top tips you could try.Â
1. Ask them to create a spending plan from pocket money
It is best to create 2 piggy banks with 2 different goals, one for savings and one for spending which allows the child to see the difference in the money they allocate for good behaviour or from doing household chores.
It works best in easy access containers where the child can take the coins out and count the savings and count the available spending money. It teaches them to save early and it teaches the concept of separating any pay you get into something for now and something for the future
2. Open a bank account on an online app
The having a visual bank account and seeing the transactions can help build that financial awareness of how money is building and where it is going and its effects on the overall fund. There may be educational tools on the app for further development to again build those foundations and learn for example about the concept of interest on their money.
3. Teach them about how credit scores work
If children can understand the difference between good and bad debt and its effects on your overall credit score this will provide a great base to make good financial decisions as they reach adulthood.
Good credit is required to buy a car or a house in the future so it’s important they know what will adversely affect that. At the same time, we can explain to them how credit cards work and how they can be useful tools if they are paid off each month to boost your credit score. It is also good to show them the maths of what high interest credit looks like and how not paying the credit cards off impacts their credit score. Credit scores are much easier to visualise nowadays through charts and bank apps that we can get on a daily basis.
4. Teach your kids about the stock market
We were never educated about the stock market at school which is why most people would struggle to explain what the FTSE 100 actually is if you asked 100 people randomly. Educate yourself then educate yourself as the final salary pensions are a thing of the past all pension savings and investments will be made by investing in the market and knowing the fundamentals is key to success
5. Play games with money
One of the best games to play with money is monopoly but too often as kids the focus is on the dog or the hat that move around the board or in passing go. Take a different approach give your child a financial reward for building wealth by playing the game well. Focus on the building of assets on the best roads bringing in the most profit. Remember there are tricks to playing monopoly certain roads produce much more income as penalties for landing on them as you are statistically more likely to land on them, have fun working out which roads!
Contact me to discuss these 5 top tips and more tips for your financial future
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