Top tips to teach your kids the value of money
We are often asked what our top tips our on how to teach the value of money. I thought I would put down some of my learnings on what families using RoosterMoney have done.
Teaching with pennies will prepare them for pounds
As with anything, start small before going big. The earlier you can get children into handling money – which can just be counting out combinations of 1, 2 and 5p pieces, the greater their understanding will be. Reward Charts can be a brilliant way to get them started if you aren't ready for money and this can work really well if you are still using it to encourage good behaviour! We've made Stars a currency in RoosterMoney so you can get them going.
Get into a routine with conditions
Routines help you get into a cycle where you are giving money based on a set of conditions you set. Routine's also saves you money and stress; it's what we like to call the Pocket Money Paradigm! If you are giving money in a routine it means you can avoid forking out for lots of things on an ad hoc basis!
Create some rules about how much you're going to give.
There is no golden rule here. Some parents raise it every year by the same amount. A nice way to work it out is to decide what you want them to cover with their pocket money. Is it just their Football cards or do you want them to cover some of their clubs? "Needs" versus "Wants" is another good way - with parents covering their Needs but its down to them to cover their wants. You can check out some tips on conditions and how much to give in our guide of how much pocket money to give.
Encourage your kids to earn!
If you give your kids cash at the shops without any guidelines, you aren't really incentivising them to think about where the money comes from and the importance of spending it (or saving it!) carefully. By either making them earn it through a Reward Chart or doing odd jobs, they will understand the money they have has a value AND feel even more proud when they buy something with their hard earned cash!
Empower your kids
Encourage your kids to think about the difference between a good and bad purchase by letting them make decisions about what to buy. That doesn’t mean you can’t give them advice on whether one thing is better than another but ultimately, if they make the decision to get something that falls apart a week later, then they will have learnt the hard lesson for next time. Using something like RoosterMoney where kids can choose what to save for – whether online or in the shops – and puts them in charge of saving for it, will start those lessons early while you keep a watchful eye!
Teach the difference between Needs and Wants
Everyone may want an Xbox One but do they need it? Food is boring to buy when you’re 8 but everyone needs to eat. Having a conversation with your children about whether they need something will help them determine what is a luxury and what is a necessity and is a great introduction to budgeting. This could be simply a game – divide everything up in a room into ‘needs and wants’ or if they really want something, get them to work out how much they need it and then encourage them to save for it.
When it’s gone it’s gone
Something we talk about in our pocket money tips resources but a really important lesson is to understand that once pocket money has been spent, there isn’t any more. This is one of the best means of teaching kids the value of money and the importance in keeping hold of it.
There are also some great videos from the Money Advice Service, which are worth checking out.
Integrate it into the everyday
I believe that the most fundamental thing to have a happy and responsible relationship with money is to talk about it. That's not just a "with your kids" thing. It's with your whole family, whatever age. It breaks down barriers and increasing understanding. For children it stops the "why does dad complain when I leave the lights on" and "why does mum get so stressed about us leaving the door open". Show them a utility bill. Put them in charge of finding you a cheaper deal. Or give them your list and budget for the weekly shop and head off to the market. Building conversations about money into the everyday with help put money in context for your kids.