Wouldn’t it be nice to go back to the days when your biggest money worry was whether you could afford to buy a bag of sweets?
We surveyed kids across the UK* to learn what they think about money and the cost of adult life. 41% said they think that money can buy happiness – perhaps because, for them, it often leads to sweets!
Considering money’s role in life, how can we teach them to manage it effectively?
It’s important to help your kids get to grips with the ins and outs of spending and saving early on. Check out our tips for advice about how to teach your kids to become savvy with their cash, to help them form good habits early on.
1. Show them that people work for money
Our survey revealed that kids receive an average of £5.20 in pocket money each week – but 1 in 3 don’t do anything to earn it.
Of those who do ‘work’ for their money, making beds, setting the table, and tidying the house were the most popular chores they were expected to carry out.
It’s important to show children that money doesn’t come for free – in order to buy the things we want and need, we have to take on responsibilities and see them through.
Set out a chore rota and explain that if they keep on top of it, they will get their pocket money at the end of the week. This will create a routine, and they’ll feel a sense of accomplishment for earning their ‘income’!
2. Let them experience the importance of saving
Most of the kids we surveyed said they spent the bulk of their pocket money on toys and sweets. While it’s important that children have fun and enjoy the money they’ve earned, you should also ensure they understand the importance of saving.
Perhaps there’s a toy or game they really want but can’t quite afford. Help them to figure out how much money they would have to put aside – and for how long – to save up enough to buy it. Encourage them to stick to their plan by ticking days off the calendar or making a chart that shows how their savings pot is growing each week.
While it might be a struggle for some children, helping them create a savings plan will teach them to be disciplined with their money. Once they’ve reached their target, take them to claim their ‘prize’! Let them pay for it themselves, so they can appreciate every aspect of the experience
3. Highlight the basics of income and outgoings
According to ONS data, the average UK worker’s earnings come to just over £2,000 a month. We asked kids how much money they think their mum or dad earns – they estimated an average of £5,500!
While it might be difficult for young children to get their head around the realities of income, bills, and expenses, teaching them about budgeting can help them understand how their own pocket money should be allocated to different things.
Set up a notebook where they can write down how much they have, compared to how much they plan to spend throughout the week. Encourage them to work out an allowance for how much they want to spend on things like sweets, games, toys, and savings. This will allow them to figure out how much they can afford, and what they’ll have to sacrifice if they blow their budget!
Doing this means you can help them prioritise wants and needs, and let them figure out how they’re going to make their pocket money last until their next ‘pay day’.
4. Let them learn from their mistakes
We’ve all made purchases we regretted and learned from those mistakes. Kids should have the same opportunity.
If they fail to do their chores or break the rules, explain they haven’t met their half of the agreement and therefore they haven’t earned their pocket money. Or if they spend it all at once and can’t afford to buy something they want later in the week, make it clear that they’ll have to wait and save up for next time.
By being firm and sticking to your arrangement, they’ll learn how to take responsibility for their own spending. It can feel like a harsh lesson, but it’s a very important one, and it’ll pay off in the long run.
Teaching kids the value of budgeting, saving, and spending carefully will equip them with skills they can use in the years to come. And while sweets, toys, and games are all important aspects of growing up, responsible money management is priceless.
It takes children some time to really get to grips with all the costs of life. Check out what kids had to say about money and how much they think things like cars, houses, and milk cost in our hilarious video.
*Survey conducted by OnePoll, on behalf of Provident, of 1,000 5-12 year olds and 1,000 parents living in regions across the UK.
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Teach your kids to be smart with money