What’s the most important lesson to teach kids about money? #BritmumsMoneyAdvice

March 20, 2015 Off By Laura TMOT
On Tuesday I will be helping Britmums to host the #BritmumsMoneyAdvice twitter party where we will be sharing our advice on how to get kids interested in money and what we try to teach our own kids. 



This got me thinking about all the lessons I try to teach our kids about money. I have been thinking about all the different lessons that should be taught about money and trying to decide where to start is really hard.

You see I don’t think you can just tell kids about money I think you have to show them.

The way you see money and the way you spend it can have such a huge impact on your life. It can plunge you into debt, depression and worse or if used wisely it can allow you to succeed in life. Even those with the most well paying job in the world can have no money if they are not sensible with it.

I decided to ask my girls what they already knew about money. I was quite surprised to hear that they already understood so much and obviously what I am doing is working so well. We discussed earning money. They both earn pocket money by being good and tidying their rooms and they understand that Mummy and Daddy earn money by working whether at home or in the office. I was impressed to hear that Elizabeth understood that if I work a small amount of time I only earn a small amount of money and that when I am working long hours it means that I am earning more money.

Elizabeth and Alison both have money boxes, savings accounts and trust funds. I want them to understand that money can come and be spent in many different ways. 

We go on holiday a lot and we try to make them save for their spending money. We have done this a few times and Alison is much better at doing this than Elizabeth. Elizabeth does then get upset that she has less which is a really important lesson.


When we visited Disneyland Paris last year Elizabeth really wanted a new dress which was very expensive, we explained this to her and she understood that although she loved spending money to get something expensive that she really wanted then she would have to save her money and not spend it on the smaller items. Alison did not have a big purchase in mind so was able to buy lots of smaller presents.

It seems that at just 5 and 6 we have given both girls to understand the fundamentals of saving and earning so I decided to approach the subject of borrowing. I gave her the following scenario.

She had £1 but wanted to buy something for £2.
I offered her the £1 but said next week she needed to give me £2 back.

She didn’t like this idea, she said she would happily give me the £1 back but not any more than that. I asked why and she said it was unfair for me to get more back that I paid out and that it would be silly of her to pay more than she got. So even at just six years old the idea of borrowing at interest doesn’t appeal to her either so what can I teach my super savvy six year old?

Well it seems that patience is an issue. When asked if she would spend £20 on a toy and get it immediately or spend £15 and get it a week later through the post she went for the immediate gratification. I now know what I have to do. I have to teach her how to look for the best deal before she spends her money. I will introduce her to coupons and vouchers and show her how one toy can vary so much in price.

I still need to teach my girls to be as savvy as me and to save money where they can so that they have more of it to spend later.

Picture

Elizabeth’s at home savings

With so many people struggling with money it is hard for parents to be a good example for their children but teaching by example is really important. Even if it is to show children, especially teenagers, that borrowing money is really not a good solution I think every parent has something that they can teach. The Money advice service did some research and found that just over half of all parents talk to their children regularly about money. It is best to teach children about money early but the Money Advice service has some great advice and information of helping teenagers learn to budget as well as some advice that is I am sure could help all of us.