TEACH THE POWER OF SAVING
HOME-SCHOOLING the kids is just one of the many tough challenges families have had to get to grips with during the coronavirus pandemic. As well as being guided by your child’s school, and perhaps taking some teaching ideas from TV shows and the internet, parents may also be able to find some time to teach their children some money skills.
The way we use money has changed hugely since many of us started getting pocket money as youngsters, and with more opportunities to manage money digitally, there are now many options for children, particularly as they get older.
To get started, here are some tips from Laura Laidlaw, head of customer communications at Standard Life...
TEACH THEM THE VALUE OF EARNING
MANY parents choose to pay a sum of pocket money in return for completing chores or to reward good behaviour. It’s a great way for younger kids to get familiar with the value of coins and notes, and earning their own money can make them feel grown up.
Piggy banks or savings jars are a great way for younger ones to watch savings grow. It’s a good time to discuss what they’d like to do with their money and help to create good habits. You could also introduce the concept of Spend, Save and Give:
■ SPEND: Your children can spend an agreed portion of their money on whatever they want, maybe a magazine or sweets.
■ SAVE: A second portion is saved – whether it’s for a particular goal or a rainy day.
■ GIVE: You could encourage them to use their some of their own money to help others.
There may be a favourite charity the family supports. Awareness days are also a great time to discuss donating.
HELP THEM WITH SPENDING OPTIONS
FOR older children, pre-paid debit cards are available, so pocket money can be paid straight from your bank account into theirs.
Cards can give your child some independence when it comes to making choices, but parents can retain a high level of control, including setting limits on how much children can spend and what they can buy.
Many also come with a smartphone app so – if your child has a phone – you can track how much money they’ve earned and how much they have spent.
But be aware of charges though and do your research before choosing a provider.
WORKING towards longer-term saving targets helps teach children that resisting the temptation to spend immediately can lead to bigger rewards.
For older children, you could promise to pay them a ‘bonus’ if they hit an agreed savings target. For example, if they’re saving for a new game that costs £25, say you’ll give them the £5 if they can save £20.
This gives you an opportunity to explain how saving and investing for the longterm works, why they might need to do it and how it can help them generate more money in the long run.
OPEN A SAVINGS ACCOUNT
THIS is a great way to help children understand about earning interest. For the longer-term, a Junior Isa may be right if you are comfortable your child can’t access the money before age 18. There are cash and stocks and shares options.
To help your children understand some of the basics of how banks work, try the Bank of England’s website: bankofengland. co.uk/knowledgebank/what-dobanks-do).
BUILD A BUDGET
KEEPING track of expenses and learning how to budget is another key element of financial literacy. Older children can write a list of all their monthly money coming in and going out, including any subscriptions and money for treats. Encourage them to put regular amounts away as savings too, creating a cash buffer for unexpected expenses. Budgeting is also a perfect way to give your child an overview of their finances and help them achieve their financial goals. It’s a great motivation to seek out ways to keep costs down. This could mean sacrificing buying items now in return for the ability to afford something better in the future.
TEACH THEM TO STAY SAFE
YOU may think your kids are more tech-savvy than you, but it’s still important to teach them about protecting their information online.
Keep an eye on your child’s social media accounts and make sure they know about the dangers of sharing personal information and online scams.