Give a kid ten quid and you’d expect the money to go on sweets, not into savings. But whose fault is that? Is it just “kids being kids”, or can we blame the parents?
Although expecting thriftiness from a child seems like serious wishful thinking, a recent study by Cambridge University suggests little’uns may have formed their adult money habits by the tender age of seven.
Many of us could be doing much more to shepherd our kids to frugalness. Seems like a tall order, huh? We’ve put together some top tips for making the whole experience fun and effective.
1) Always have a reason
Start giving your kids responsibility for their own money as soon as possible — but always make it clear why they’re getting it.
If they have pocket money, make sure they’re doing something to earn it. This could be chores, homework, or good deeds. The important thing is that they never expect money for nothing and that they learn the consequences of when they don’t keep their end of the bargain.
If they’re given money as a gift, make sure they know it’s a gift and that they’re receiving it for a special occasion. Make sure other friends and relatives know this too, so your kids never get money “just because”.
2) Force them to save
Set your kids up with a savings account and make them save 10% of what you give them. Teach them how to put money in and take money out, but make sure you monitor the balance to check they’re not cheekily overspending.
It doesn’t matter if you give them a little bit more to compensate for the saving. The important thing is that they get used to putting a set amount of their income away for a rainy day.
When they get a bit older you can then introduce them to the different ways to save and leave it up to them where they put their savings.
3) Learn as you play
Video games often get a bad rap, but you’d be surprised at how much some can teach you about the real world.
Just like real life, there are some video games out there that have their own economy with banks, resources, markets and jobs. Players learn how to get stuff, protect what they’ve earnt and use their skills to get more.
4) Get the basics covered
What actually is money? This is something that you may well struggle to understand yourself — and who could blame you? It’s a complex topic and we’re not actively taught anything about money in school.
That’s exactly why teaching kids about how money is created, lent and saved from an early age will put them at great advantage.
Involve your kids in the family financial discussions and make sure they know what’s going on. There are also tons of free online resources that do a great job of demystifying the whole business.
5) Make a mini-entrepreneur
There’s always that one kid who sets up shop selling sweets out of his locker. But where are all the other kids buying in bulk from the cash and carry and undercutting the prices?
Entrepreneur(ship)(ialism) is another one of those things we hear a lot about, but never really get taught. It’s a myth that it’s “in the blood” — wrong. Anyone can do it with the right research and commitment.
So encourage your kids to set up their own little businesses. Get them to set up their own little tuck shop. Or when they’re older get them gardening for the neighbours. Whatever it is, get them thinking!