Start early: Start as soon as they are able to count and make money the topic of regular family discussions. Time these around dates when they are due to receive a cash gift so that you can talk about saving versus spending.
Want versus need: While your child will naturally ask for the latest games console, making them understand the difference between needs and wants will help them make sensible spending decisions from a very young age. Parents should reinforce through words and actions that it’s important not to spend more money than you have. One good way is to keep the just-for-fun purchases in check by not giving in to every request.
Know the difference: It is crucial you show your children that money can play a variety of roles in their daily living, whether it is spending today, or saving for tomorrow. Providing pocket money in lower denominations makes it easier to allocate a proportion of income to different goals.
Learn from mistakes: When kids have their own money, it is essential that they make choices and deal with the consequences of their actions. By experiencing negative consequences first hand, they will learn to make smarter financial decisions.
Make it relevant: Enable children to experience using the money on a practical level to experience the emotional highs and lows. One way to teach children how to handle money is through routine tasks and household chores. Use the weekly food shop to talk about planning, saving and finding the best value. Let your children hold the list and tick off each item or, if they’re older, give them a few items from the list to find on their own at the best price.
Lead by example: Parents have a great deal of influence on their children, and it is not just the positive messages that resonate. Children tend to copy what we do rather than what we say, so limit the number of shopping trips as a leisure activity, as they might start to think that money is an unlimited resource and that spending is fun.