We send our children to school where they learn essential life skills like reading, writing and tying shoelaces. What schools often don’t teach children is how to be financially literate.

Managing money is as important as reading, but it’s not widely taught in schools yet. So, the onus is on parents to impart this wisdom, starting in the children’s formative years, up until adulthood.

It’s not difficult, and maybe you’ll learn something at the same time!

Teach them to create a budget

This is the most complex lesson, but it’s the foundation of good financial health. Budgeting means that you know how much is coming in, what’s going to go out and what’s already gone out.

It doesn’t matter how small the amounts are. If your child gets £5.00 pocket money each week and her favourite magazine costs £1.99, that leaves her £3.01. If she sees a toy for £6.00, how can she afford it? Does she buy the magazine and save the £3.00 for two weeks? Or save £1.00 a week for six weeks?

The essence of budgeting is being able to adapt to changes and think ahead. It’s also about deferring gratification – if she really wants that toy, it’s a wait of at least two weeks, unless your car really needs washing!

Getting to grips with amounts, forward-planning, changes in circumstances and waiting for rewards prepares children for handling a salary. As they get older, your kids should visit this website for more ideas and help.

Teach them how to make change

People rely on calculators, automatic cash registers and card payments, so when it comes to handing over cash, they’re vulnerable to getting the wrong amount of change back. If they don’t get enough, they’re losing out and if they get too much, the cashier could be in trouble.

Not being able to do mental arithmetic means people can be scammed. They can also lose track of their own finances, especially if they’re using a card rather than physical cash.

The best way to promote and strengthen mental arithmetic is with a toy cash register and money. Handling the different denominations, adding and subtracting and breaking notes is more like fun than learning.

Teach them to balance accounts

If you know how much money’s in your account, as well as which direct debits and card transactions are pending, then you know how much you have left at the end of the month. It’s important to keep track of pending payments because they may not show in your balance and so you spend the money on something else, leaving you overdrawn.

Furthermore, banks make mistakes occasionally and if you don’t spot them, you can’t get refunds or have unfair charges repaid.

Once your children are doing longer sums in school, get them to record their deposits and withdrawals – either from their jar or an actual bank account – to see how much they have left at the end of the week.

Teach them to pay bills

Many people never pay a bill until they’ve left home! This can be quite the wake-up call if you lose track of due dates and end up with late fees.

The biggest part here is ensuring there’s enough money to pay and when there’s lots of other exciting things to spend money on, it’s easy to forget about boring utilities.

Teach your kids about automated payments like standing orders and direct debits and encourage them to pay essentials first – rent, bills, food and travelcards – everything else is optional and comes out of whatever is left.


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Vicky Charles

Vicky is a single mother, writer and card reader.

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