Teaching Children Finance

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I’m rubbish with money, I really am and it drives Paul absolutely insane. I try really hard to be good and budget but it just escapes me somehow.  Although my parents were quite good at teaching me about money, in hindsight maybe they didn’t go far enough for example I never really had a proper concept of Credit Cards or Loans – to me they were just free money that I borrowed to go on some really fabulous holidays!

So where to start with Miss L’s financial education?

We’ve started off by giving her household jobs to do – dusting, folding laundry and the odd bit of drying up – so she can earn her pound a week pocket money. She knows that it’s her money to spend on what she likes, toys, sweets, books but she has to save up to say buy a book or a more expensive toy like a Build a Bear and once that money is gone it’s gone and she has to save again.

But where does it go, now she’s getting older?  I’m thinking of opening a children’s bank account for her so she can learn about saving.  For example she can save up all her change and then taking it to the bank and put it into an account.  The idea behind this is that by her being able to withdraw money lead naturally onto teaching her about credit cards and loans – a scary amount of young adults have no idea about APR or how easy and quickly you can get into a lot of debt.

When she’s older maybe 12ish, we’re going to give her clothes allowance to teach her about budgeting (and to save on arguments!) so she can buy her own out of school clothes – obviously we’ll still buy school uniforms.

But what else is there that you can do?  What age do you think children should understand about money? How have you or will you teach your children about money and finance?

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9 Comments

  1. I have been thinking about this a lot and we have a little shop and I have also opened a bank account with a book so the boys can pay in any money they get for birthdays. The fact is Maxi understands it more than me and wanted to know the difference between credit and loans!!

  2. Sounds like a good idea, amy will definitley have a clothing allowance when she’s older, thankfully she’s just turned 4 so don’t have to worry about it for a while yet. She has a savings account, but is still a bit too young to understand it yet.

    I went a bit mad with credit cards when I was younger, I got a loan and cleared the cards and chopped them up, it’s horrible when you’re paying for things after you’ve long forgotten about it.

    Hopefully when she’s old enough to understand Amy can learn from my mistake and trust me when I say that credit cards are not to be abused!

    1. See I did the same when I was younger. Credit cards are brilliant for emergencies and buying stuff online, but it’s so easy to just think ‘well I’ll just get those shoes/DVD/Holiday’. That’s kind of why I want to teach Lily more about the responsibility of them.

  3. My 4th grader (age 10) has a bank account set up by her teacher at school. I am a bit vague as to how it works exactly , but the columns have names at the top that mimic a budget. date/description of transaction/ amount of payment or withdrawal/ + or -/amount of deposit or interest/ balance.
    I see looking at her budget that she got $50 for bringing me something to sign and then returning it the very next day, she is paid a weekly salary of $5 a day (she has to get me to sign her homework agenda every day – if she forgets $5 is deducted for that day). She currently has $225 in her account. The teacher keeps a big tub of goods for them to buy – Jojo has come home with pot pourri and window markers among other things. Of course no money actually changes hands but she is responsible for keeping it all balanced. Does this make sense?! You could modify it for home.

    1. That’s really forward thinking of your daughter’s school. I might try that for home – thanks for the inspiration!

  4. I love the idea of giving her little jobs to do. Eliza has a piggy bank and we have opened bank accounts for them both as grandparents give them cheques for birthdays etc. But I think it’s brilliant to teach the real value of money, hopefully it will help the understanding of what they can and can’t have and why they can’t have everything. Maybe I’d be better with money if someone had taught me when I was young.

    1. I really do think it’s something that’s learnt in childhood. Everyone I know who had parents teach them about money etc are really good in adulthood handling their finances – the rest of us, not so much!