Did you know that children begin to develop money awareness by age 3, and by age 7 have begun to form life-long money habits?*
While it can be tempting to shield children from money, not wanting to worry them about grown-up concerns, by avoiding the conversation you miss the chance to teach good money habits from a young age. Follow our top tips for how to teach your kids about money;
Set a good example
Children learn and develop habits by watching and listening to those around them. How a family manages their money, and how money is talked about within the home can have a huge influence on children’s money mind-set.
Set a good example by involving your kids in the budgeting before doing your weekly shop, look to fix items when they break instead of throwing them away, and avoid ‘retail therapy’ and associating the idea that buying things will cheer yourself up.
Include your children in the conversation about saving money for big items such as holidays or a new car, and demonstrate how small sacrifices such as forgoing a toy or a treat can add up to help meet bigger savings goals.
Be mindful of how you talk about money
Common phrases such as “money doesn’t grow on trees” and “we can’t afford that” can often lead to a negative feeling about money itself, and talking about money for children.
The principles of financial wellbeing can be brought into the conversation, and instead of saying “we can’t afford that” perhaps reframe the conversation to “we are choosing to spend our money on [this item] instead”. This allows children to learn that there is money for essential items and bills, and begins the journey to understanding needs vs wants.
Let children practice budgeting
The best way to teach your kids how to manage money is to let them practice. We have a number of fun at home lessons you can use in our Ollie the Owl Parents Guide to let kids try their hand at budgeting trips or a weekly shop, or to let them set a spending goal and save up for an item on their wish list.
Alternatively, one of the most common ways to introduce the idea of responsible spending is through pocket money. How much you give is up to you, but even giving your child a small weekly amount of money to work with can let them develop saving and spending habits.
You can use our printable Savings Poster and Stickers to help children see their progress towards their savings goals, and use a simple glass jar to keep the money is so they can watch it grow every week. It’s easiest to do these exercises using cash, so money is a real and visible object for kids to spend or to save.
Help Banks feel more approachable
Almost half (47%) of 16 and 17 year olds in Northern Ireland who have a Bank Account have never actually stepped foot into a bank branch**. Recent research conducted by Bank of Ireland UK showed that some teenagers in Northern Ireland think of Banks as ‘confusing’, with ‘men and women in suits’ and an environment that can be intimidating. By introducing your kids to a bank branch at an early age, they will become more familiar and comfortable with them as a service they will need to use as they grow up, and hopefully foster a more positive association with them.
If you would like more resources on how to talk to kids about money, visit our Bank of Ireland UK Youth Hub or visit the following organisations;
- Parenting NI: https://www.parentingni.org/
- Money Advice Service: https://www.moneyadviceservice.org.uk/en/categories/talking-to-your-children-about-money
- Childmind: https://childmind.org/article/talking-kids-money/
Sources
*Money Advice Service, Habit Formation and Learning in Young Children, 2013
**Money Advice Service, Financial Capability of Children, Young People and their Parents in Northern Ireland 2016, p5