Good money management can make a huge difference to our lives and those of our children. With financial education now being a hot topic in UK schools, it is essential for UK parents to ensure that children are aware of the fundamentals of finance from a young age.
Financial education is about educating young people about how money works, which includes fundamental topics such as budgeting, savings, investments, and debt management. While these concepts are often seen as too complicated for children, experts are now advocating that financial literacy should begin early. By teaching children the basics of money management from an early age, parents can help their kids develop financial confidence and develop the skills they need to make smart financial decisions throughout their lives.
With that in mind, here are some tips to help UK parents start teaching their children about money:
Start teaching early
The sooner you start teaching your children about money, the easier it will be for them to understand more complicated concepts later on in life. From as early as 3 or 4, parents can start talking to their children about money. This could be something as simple as counting coins, or discussing what something costs. It is also important to model good money management yourself, and to talk to your children about how you save, plan for the future, and pay your bills.
Teach about delayed gratification
Explaining the concept of delayed gratification can help children understand why saving money is important. Talk to your child about how money saved can be used to purchase something they want in the future, such as a bike or music lessons. Showing your child a piggy bank and how it slowly collects money over time can be a great visual aid in explaining delayed gratification.
Show children how to make wise decisions
When children get old enough, you can start introducing more complex concepts, such as budgeting and investing. Talk to your child about the importance of making wise decisions when it comes to spending, and help them set up a budget. Parents should also encourage the wise use of credit cards, as well as exploring different types of investments, such as stocks and bonds, which can help secure a better financial future.
Open a bank account
Opening up a children's bank account is a great way to introduce your child to the concept of banking and managing money. In the UK, most banks offer accounts specifically designed for children. These accounts should be simple to open and understand, and can be opened with a very small amount of money. As your child grows older, a bank account can also offer guidance on how they should save, budget, and spend.
Get the family involved
Finally, teaching kids about money can be a great opportunity to get the whole family involved. Get everyone involved in tracking spending, and encourage each family member to be comfortable in discussing money and their financial goals. Kids should also be encouraged to ask questions and develop their own understanding of money.
With the right amount of guidance, financial education can become a fun and engaging experience for the entire family. By getting their children excited about saving and investing, UK parents can help them become more financially confident and give them the tools they need to make good financial decisions throughout their lives.