Here is some advice on how to talk to children about money and give them the tools to try and avoid debt as they get older.
- Talk about money. This is the easiest way to help your child understand personal finances. Explain to them your decisions around money, how you budget and how you feel about dealing with money.
- How is money earned? Tell them about where the money in the household comes from. You could show your child your payslip and explain how finding suitable employment is an excellent way of building financial understanding.
- Wants vs needs. Explain the difference between buying what we need and what we want. Ask them about things they think they need and what they want. And discuss times you have had to save for what you wanted. This is an excellent way of introducing the concept of saving and the need to exercise restraint in their spending, as well as helping them to understand that sometimes times will be hard and you won’t be able to afford everything everyone wants.
- Savings challenges. Encourage your child to set a savings target and help them get good habits early. You could also involve a conversation around keeping money safe and planning for the future.
- Involve them in the weekly shop. As you go around the supermarket, ask your children to choose the best-value products and get them to add up as you go from aisle to aisle. As well as learning valuable lessons, your new helpers can make your job easier at the same time.
- Talk about the different ways of paying for things. From cash and traditional debit or credit cards to paying with contactless cards or even using your mobile phone. For older children, this could open up the conversation about ‘pay later’ companies and what this means.
- Involve them in appropriate spending decisions. Such as buying a new computer or a kitchen appliance. Making real-life spending and saving decisions about even small amounts of money can help children to understand more about managing their money.
- Show them the cost of running a home. Look at utility bills together to explore the cost. Can they help to manage the household budget? See if they can find any savings that you could make!
You can find out more about Debt Awareness Week here.