Words: Sarah Reid Illustrations: Ben The Illustrator
It’s never too early to start a conversation with your kids about money. Many lifelong financial habits are already embedded by the time they reach the age of seven, according to a study at Cambridge University.
Of course, jumping straight in with your take on the latest interest rate decision isn’t going to win over the young people in your life. But once you scratch the surface, especially if you’re talking to a child who hasn’t really thought about money before, then it can genuinely become a fun and interesting topic.
Experts recommend giving children regular pocket money. The amount doesn’t matter nearly as much as the habits formed by knowing money comes in on a certain day or date.
Figures from credit reporting firm Experian found that more than half of parents (51%) who gave pocket money did so to help their child’s money skills. But at the same time, 30% of parents felt they were held back by their own lack of financial confidence, or resources to help them offer guidance.
So talking to children about money can not only help the next generation feel more confident, it could also create opportunities to learn together.
From a young age, most kids can understand that money is finite. They can also grasp the idea that borrowing cash means you’ll be expected to pay it back at some point.
Seeing the adults around them using a credit card is a good way to introduce this idea, explaining the reasons why we use credit and outlining the basic pros and cons.
Sadly, for a growing number of children, money in their household is scarce and that’s likely to be something they’ll be aware of from an early age, too. But for others, discovering that spending too much might mean the pot runs dry – even for adults – can be a profound lesson.
That’s when the concept of prioritising can come into play. At this stage it’s probably enough to boil it down to ‘needs’ versus ‘wants’. This works for the household budget as well as for their own pocket money.
Although they’ve probably never thought in these terms, it’s pretty easy for them to understand that paying the rent or mortgage is more important than treating the family to a takeaway. From there, the conversation can easily move on to their own needs and wants. (A quick heads up: their bar for what constitutes a ‘need’ can be very low!)
Priorities don’t have to be about the macro. Supermarkets tend to put
