What do you tell your kids about money? When do you do it?
Opinions vary on the age you should start teaching kids about money – after all, every child is different and what’s right for one won’t be right for another.
But debt is a big problem in the UK, and there have been many calls for more financial education in classrooms. Helping your children understand money and budgeting early on can make a big difference to the way they handle their finances in later life.
In the UK, your child can open a current account with your permission at 11 years old. By the age of 16, they can get a debit card if they want to, and can open a bank account without your permission at 16.
They can’t get an overdraft or loan until they’re 18, although they are entitled to a tax-free cash ISA savings account at the age of 16.
How you prepare your child for their first bank account is up to you, but here are some ways that other parents have tried:
• Coin toss / tiddlywinks with coins. Children count how many coins they can get into a pot.
• Piggy bank of ‘shrapnel’ coins – any loose change of small denominations can go into their piggy bank. Encourage them to count the coins.
• Arts and crafts with coins, drawing around each coin, tracing coins, colouring in coin pictures, so they get to know shapes and names of each coin.
• Read them a story book that has something to do with money, or coins.
• ‘Play shop’, with a toy till. They’re available in so many toy shops.
5 – 10 years
• Encourage them to save their birthday money, or money given by relatives at other times of the year for special occasions.
• If they ask for something they want, you can encourage them to be patient by telling them to save their pocket money, or wait until Christmas.
• Encourage them to save their pocket money in a piggy bank.
• You can open a savings account for your child at any age, but this age range might be a good time to tell them about it and tell them why it would be a good idea for them to contribute to it as well.
11 – 15 years
• You might like to encourage your child to ‘earn’ their pocket money. You don’t have to send them up a chimney, but most kids can manage the washing-up, vacuuming, etc.
• At the age of 11, your child can open a current account (with your permission). This can teach them a lot about managing their finances in the modern world.
• Saving for the future – has your child demonstrated that they can save money for something special? If not, how could you encourage that?
• Giving them pocket money (or letting them earn it) is a good way of helping your child to learn about budgeting. You might encourage them to find a little part-time job at this age too – like a paper round, babysitting, or moving lawns, depending on how mature you feel they are.
Children have to grow up and be responsible for their own money. If they never have the chance to learn about money, or make mistakes with their money that they can learn from, then who knows how they’ll handle their finances when they fly the nest?
This article was produced by Insolvency Practice Freeman Jones.
Thanks for reading!View all Katie posts.