Yes, we were all young once (maybe you still are!) and just ‘had’ to buy the latest phone, get a new outfit when going out with friends, or just really could not live without that really cool/funny/cute item that you just saw! But rarely does our pocket money, or weekend job, whilst still at school stretch to everything that catches our eye.
So, how do we help our young people to get into good money management habits?
And why are we even thinking about this just now?
Well, this week is Debt Awareness Week, that’s why!
Debt Awareness Week was launched in 2014 by the debt charity StepChange to try to increase awareness of problem debt and to advise on how to seek the advice and solutions that are available to help. This year we all (not just our young people) have had to deal with the ongoing effects of the pandemic plus many are trying to manage a steep and increasingly rising cost of living, which is adding to the pressure.
Therefore back to the question – how we do help our young people to get into good money management habits?
Here are some suggestions that we adapted from Ramsey Solutions (ramseysolutions.com) website on ways to do this for different age ranges:
How to Teach Pre-Schoolers About Money
- Use a clear jar to save
The piggy bank is a great idea, but it doesn’t give kids a visual. When you use a clear jar, they see the money growing. Yesterday, they had a pound coin and five 50p coins. Today, they have a pound coin and five 50p coins, and a 20p coin! Talk through this with them and make a big deal about it growing!
- Set an example
Studies have found that money habits in children are often formed by the time they’re 7 years old. Little eyes are watching – and if you use your plastic every time you go out to dinner or the shops, they’ll eventually notice. Or if you and your spouse are arguing about money, they’ll notice that too. Set a healthy example for them and they’ll be much more likely to follow it when they get older.
- Show them that stuff costs money
You’ve got to do more than just say, “That pack of toy cars costs £5, son.” Help them grab a few pounds out of their jar, take it with them to the store, and physically hand the money to the cashier. This simple action will have more impact than a five-minute lecture.
How to Teach Primary School Aged Children About Money
- Show opportunity cost
That’s just another way of saying, “If you buy this video game, then you won’t have the money to buy that pair of shoes.” At this age, your kids should be able to weigh decisions and understand the possible outcomes.
- Avoid impulse buys
“Mum, I just found this amazing dress. It’s perfect and I love it! Can we buy it please?” Does this sound familiar? This age group really knows how to capitalise on impulse buy—especially when it uses someone else’s money.
Instead of giving in, encourage your child to wait at least a day before they purchase anything over £10. It will likely still be there tomorrow, and they’ll be able to make that money decision with a level head the next day.
- Stress the importance of giving
Once they start making a little money, be sure you teach them about giving, perhaps by helping a local charity or for a community event. Eventually, they’ll see how giving doesn’t just affect the people they give to, but the giver as well.
How to Teach Teenagers About Money
- Teach them contentment
Your teen probably spends a good chunk of their time staring at a screen as they scroll through social media. And every second they’re online, they’re seeing the highlight reel of their friends, family and even total strangers! It’s the quickest way to bring on the comparison trap. You may hear things like:
“Dad, Mark’s parents bought him a brand-new car! How come I have to drive this old banger?”
“Mum, this girl at school got to spend £500 on her 18th birthday party. I want that too!”
Contentment starts in the heart. Let your teen know that their ‘old banger’ (although not the newest car on the block) is still running well enough to get them from point A to point B. And you can still throw a memorable, milestone birthday party without spending a chunk of your retirement savings funding it!
- Give them the responsibility of a bank account
By the time your kid’s a teenager, you should be able to set them up with a simple bank account if you’ve been doing some of the above along the way. This takes money management to the next level and this will (hopefully) prepare them for managing a much heftier account when they get older.
- Get them saving for College or University
There’s no time like the present to have your teen start saving for Uni. Do they plan on taking a summer job? Perfect! Take a portion of that (or more) and toss it in a Uni savings account. Your teen will feel like they have actively contributed toward their education.
- Teach them the danger of credit cards
As soon as your kid turns 18, they’ll get hounded by credit card offers—especially once they’re at Uni. If you haven’t taught them why debt is a bad idea, they’ll become yet another credit card victim. Remember, it’s up to you to determine the right time you’ll teach them these principles.
- Get them on a simple budget
Since your teen is often making good use of their mobile device already, get them active on a simple budgeting app (check resource section below). Now is the time to get your teen in the habit of budgeting their income—no matter how small It is. They should learn the importance of making a plan for their money, whilst they’re still under your roof.
Hopefully, this has given you some good ideas on how to help children to avoid unmanageable debt issues in the future, please see our source and resources sections below for more advice and ideas.
www.stepchange.org StepChange – Debt charity website
https://www.ramseysolutions.com/relationships/how-to-teach-kids-about-money Ramsey – Ways To Teach Kids About Money
https://www.youtube.com/watch?v=Kc65ceqrDsQ Veronia Spaine – Personal Finance Basics For Beginners
https://www.princes-trust.org.uk/help-for-young-people/tools-resources/money-management Princes Trust – money management advice
https://www.youtube.com/watch?v=sNbUHan2-5M BBC Teach – The Debt Spiral
https://www.moneymakesense.co.uk/section.php/9/1/students/0e48c2a34d89f0edf702b80971e23ad1 Make Money Make Sense – Financial Advice for Students
By Lynsey Dobbs, Senior Recruitment Officer