As we get older we’re almost expected to pass on our knowledge and experience to our younger family members – first our own children and then our nieces, nephews and grandchildren. While it can be fulfilling to help them to learn new things, watching them develop into fine human beings with bright futures and dreams of becoming successful, there are some areas where it is particularly difficult to get the message home.
Teaching them the value of money is just one of those areas. We’ve all been there, having earned our pocket money over the course of the week having done all of our chores around the house and taken the family dog for a walk. Maybe we’ve done particularly well at school in the last few days and we’ve made a little bit extra. What do we all do – spend it all in one go on something like sweets and that means we’re back to having nothing (other than a massive sugar high!)
So how do we do it? How do we convince the next generation that looking after your money is as important (if not more so) than having it in the first place?
One really good way is to explain how bank accounts work. It’s obvious to them that a typical bank account is just like an extra-large piggy bank. You put your money into it and withdraw it when you need to. Opening a savings account and explaining how that works is even better, explaining to them that leaving their money in the bank and NOT spending it actually results in your being given free money.
When they look at it that way, they’re much more likely to do just that – leave their money in the bank and learn to spend only what they need to (which, as young children, is almost a negligible amount anyway!)
Another method is to explain how accountancy firms operate. This would be information based around how businesses look after their money, describing how they employ people to do the maths for them, working out how much they are making, how much they’re spending and what they have left over – it might even inspire them, if they enjoy maths at school, to pursue a career in accounting or finance you never know.
Finally, take a look at budgeting with them at an early age. When they reach secondary school at the age of 11 or 12 many children start to spend their allowance or dinner money on their own lunches and snacks. If their parents are giving them a set amount for the week it’s important that they know how to make that money last from Monday morning until Friday afternoon.
The simple way of doing this with them is to sit down with a pen and paper, asking them how much they get given each week and then – obviously – dividing that amount by the five school days in the week. This amount is how much they CAN spend each day, but be sure to emphasis the fact that they CAN spend less than that and that spending more will reduce the amount they have left. If they can budget their own dinner money, then growing up and managing their bills will be much simpler (on paper at least!)