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When you are an adult, you have to know how to manage everything from bank accounts to loan repayments and know how to use your credit cards responsibly, or you could end up with serious money problems.
For many people though, learning about good financial management comes too late in life, usually once money problems and debt have already struck. This is why parents might want to consider teaching their children about the basics of budgeting and managing money from an early age, to make it easier to cope with their finances later on.
The great news for parents is that the government has decided to include personal finance education in the national curriculum, so basic lessons about money management will be taught in schools. However, there is still plenty you can do at home to help your children get to grips with their pounds and pennies. Start with these ideas:
Open a children’s bank account
Many banks and building societies offer very basic bank accounts specially designed for use by children. Obviously, children don’t have a lot of income to deposit in their bank accounts, which is why these accounts can be opened for as little as £1. With their own bank account, some of which come with cheque books and cash cards (not debit cards), your child can deposit their Christmas and birthday money, weekly pocket money and cash gifts from grandparents and other relatives. This is a good way to teach your child the basics of managing a bank account.
Encouraging your children to save their money, in a children’s bank account or simply in a piggy bank, rather than spending it right away is a good way to teach them about the value of things. For example, if your child wants something new, such as a new bike or a video game, you can advise them to save up for it. Saving pennies and pounds week by week, working hard on extra chores to earn a few extra pounds, will teach them to appreciate the value of the purchase and why it is important to work hard for the things you want.
Consider pre-paid credit cards for older children and teens
Older children and teenagers may benefit from a lesson in how to handle credit, so that they are prepared for later life when a letter offering a credit card deal comes through the door. It is not advisable to let your kids loose with your credit card, but you can apply for credit cards of all sorts. Including ones you can pre-load with a certain amount of cash. These pre-paid cards allow you to limit your child’s spending but also teach them about credit and borrowing money.