Talking to kids about the value of money
After seeing their six-year-old son’s birthday list, Farrah and Ben have realised it’s high time they started teaching Gabriel about the value of money. It’s true they both have reasonably well-paid jobs and only the one child but, even so, a tree house, a quad bike, a horse and a PS5 don’t come cheap. So, what can Farrah and Ben do to ensure Gabriel doesn’t end up bankrupting them before he goes to secondary school?
Pocket money
Gabriel is nearly seven - the age when most parents start giving their children pocket money, according to research by Barclays. It is a great age to start teaching young children about the value of money. By getting Gabriel to earn his money by doing household chores, Farrah and Ben will help Gabriel appreciate the effort that goes into earning money and encourage him to develop a productive mindset that doesn’t feel entitled.
Pocket money can be paid in cash or using a prepaid card. There are a number of cards available that are designed specifically for young children from companies including GoHenry, Osper and HyperJar. A pre-paid card could also be a gentle way for Farrah and Ben to introduce Gabriel to electronic payments and the world of online banking.
Having pocket money in cash though has sensory advantages, it allows Gabriel to see it, touch it, smell it, hear what it sounds like, understand how tangible it really is.
Gabriel can earn his pocket money by tidying up his toys, and by helping his mom and dad keep their home clean & safe.
Talking about money
By talking to Gabriel about money and what they spend it on each month, Farrah and Ben can help him to appreciate the kind of ongoing financial commitment involved in buying something like a quad bike or PS5. Gabriel’s probably too young for them to go through their entire household finances with him. But they can start with a large sum and show him how quickly the figure falls as they tick off all their monthly bills.
Showing Gabriel how they plan their spending provides a good opportunity to talk about the difference between wanting something and needing something. This will also allow Farrah and Ben to introduce the benefits of saving as a way of affording treats and luxuries, after paying for essentials.
Making saving visual
Making it easy for children to visualise how it’s possible for money to grow can help get them excited about saving. Farrah and Ben could do this by giving Gabriel a clear jar to turn into a homemade piggy bank. Alternatively, they could set up a savings account so Gabriel can go online to see how additional deposits and interest add up over time.
Planning for a big day out
Gabriel wants to take a couple of friends to the zoo for his birthday. This offers a great opportunity for him to use money in the real world. Putting Gabriel in charge of the spending plan for the trip may help to increase his appreciation of the value of money. Farrah and Ben should agree on the amount Gabriel has to spend and ask him to think about how he’d like to use that money. They’ll need to remind him of all the things that will have to be paid for including fuel, entry tickets, food and drink etc. Allowing Gabriel to take the lead as much as possible during the trip – by handing over cash or holding up cards to make payments – will help boost his financial awareness and hopefully make learning about money more engaging.
Going shopping
Like many children, when Gabriel goes to the shops with his parents, he wants every flashing toy that catches his eye. Ben gets frustrated because he already knows Gabriel love for this new toy will only last till he spots his next toy. Yet when Gabriel hears “no” he get really upset… regardless of if it’s a £1 popit figit-toy or £40 Train set. He wants what he wants, yet he is slowly getting used to hearing “he can’t have what he wants”.
By giving Gabriel a set amount of pocket money e.g. £1 - £5 per week, Ben can show Gabriel how to spend money now on cheap toys or save up for a few week for something he really wants. He can also show him how little money grows quickly with time and patience.
I would love to hear your suggestions in the comments on how to talk to children about money.