Teaching Kids about money

StuartGMC · 1 June 2008 at 5:34PM

In posting in the MFW area about my plans to clear the mortgage etc, I noted how we discuss finances openly in front of our DD
http://forums.moneysavingexpert.com/showthread.html?t=944413

I'm 43 and our daughter is 10; my recollection is that at that same age all I knew about money was:
1) Dad never discussed it, it was the 1970s and life was tough with oil crisis inflation and strikes, redundancies etc, so the tendency was to not "worry" kids
2) All you needed to know was:
2.1) You put savings in the building society
2.2) You get a current account when you start work
2.3) You get a mortgage from your building society
2.4) If you have to get a loan, it comes from the bank
2.5) Be very, very careful about credit cards

Life was much less complex, but also customers were not empowered at all. Today we have more choice but with it, great complexity that needs to be understood.

So, moving back to now, I thought with all the help and support here for others, we should also find resources to help children to start to learn. I've seen the Student thread but I am thinking of younger people and on searching couldn't find a similar thread?

For example, regarding our holiday, we always try to get abroad each year for a good break and it is one of the justifications we offer to our daughter regarding mum working half the week and hence DD has to go to out-of-school morning and evening Mon-Weds. Mum works as it makes the difference in the treats she can have, lessons for swimming, nice holiday etc. Since she was small, DD has been very open to explanations of this sort and even finds Spendaholics fascinating (since she stumbled upon it when she was 8!), herself noting concern that debt can get out of control if not understood.

We always talk about the price of items she would like, and for example how many weeks it will take to save her pocket money to buy the item. Then to consider is it value for money. She does of course have savings!

We also chat openly about our finances and budgeting etc so it seems natural to her as she grows. I hope she is learning about money in a gentle way without being fearful, as the personal financial world is far more complex now than when I grew up, and she will need to be savvy in her planning.

So I would welcome comments from others here on resources or ideas to help children so hopefully they start out with a mind to understand basic finances, need to budget for things, overpay on mortgages, always clear credit cards each month etc as they become teenagers.

If there is enough interest, maybe it can be a separate sub-forum?

Am I alone in this idea of wanting children to be aware at a level suitable for them to comprehend, or, do you believe we should not involve children in these ideas until they are teenagers (i.e. the "growing up too fast" argument).

Looking forward to your thoughts.

ailuro2 · 1 June 2008 at 6:02PM

We discuss money openly in fornt of our 9 year old, her pocket money snd clothing allowance have been paid into the bank for years. This doesn't mean she has complete autonomy over what she buys to wear, just that it gets her used to having a limit on how much she spends, and she knows the necessities must come first.

She asked what I was doing on the pc today when I was surfing... I was looking for a holiday for Christmastime.

DD - can we go to Florida
Me- no honey, it's too much money
DD - but if we start saving now we'll make it
Me- no, have a look, here's what we have on this year already in way of trips and holidays, and how much it will all cost.
DD - ouch, that's a lot of money, no wonder we can't go to Florida!
Me - but we are trying to find somewhere nice that's a lot cheaper so we can still go away.

When I was young, I would have been told not to ask, as it just reminded them we never had any money, and there wasn't any point in asking as we'd not get anything. Maybe if I hadn't known I'd be hit for asking I would have asked them how they could both afford cigarettes.:p

All I know about money has come from learning the hard way, and from MSE, so I think it's a great idea to teach kids early on. DD doesn't know how much we earn, but when she's a bit older we'll tell her, because I know right now she'd carry it to school.:rotfl: We'll also tell her where that come in compared to her career choices - working in a shop or being a Dr are her current choices, wonder which salary she'd prefer.

arthur_dent_2 · 1 June 2008 at 6:05PM

I have been teaching my children to value money since they were 18 months old. I am not exageratting, anything bought for them was paid for by them. It really only amounts to them giving pennies to a cashier at that age but I insisted that they were given the receipt. Fats forward to now, my children are 6 and 4 and if they want something, they pay for it out of their pocket money or from ebay or car boot sale sales. (Ebay rules in this house). My eldest is very aware of what is and isn't good value and knows exactly where the cheap sweets shops are in town. Sometimes I do wonder if maybe I am a little extreme, eg when in skeg the other day she wouldn't buy a ball from the vending machine because they were a pound and you could get them for fifty pence elsewhere, but generally I am very proud of my childrens ways with money and I will continue to teach them and not leave them in the dark like my parents did.

StuartGMC · 1 June 2008 at 6:49PM

Thanks for the quick replies and confirmation of changing attitudes to educate children about money; good to see we're not alone!

If I can find any additional resources I'll try to post back here, but presently like Ailuro2 and Arthur Dent, we'll continue to have full and open discussion, and hopefully we can raise a generation who will really make the financial sector work hard to win their trust and money in the future.

2cats1kid · 1 June 2008 at 7:31PM

My DD is 10 and gets a monthly allowance paid directly into an account which will give her a cash card when she is 11 and a Maestro card when she is 14.

DH and I pay for school uniform (inc shoes, trainers), underwear, extra tuition (e.g. her violin, piano, karate) and exam fees for the extra tuition. We also pay for school trips but not any spending money for those trips. She pays for pretty much everything else. So if she needs birthday presents for her friends, clothes, trips to the cinema etc. with pals, she pays out of her own money. This has just started since January, so in case she got into trouble I gave her two "get out of jail free" cards. One is worth £5 and the other £10, and if she can give me back the cards on Dec 31 this year they are worth double their face value (to encourage her not to think of them as available cash).

In just the 5 months since this has been happening I have noticed her weighing purchases up a lot more and coming to the conclusion that things aren't worth the price. I've introduced her to the idea of opportunity cost, and she uses that in her decision making a lot.

The first 4 months she had the money in cash, plus whatever she had in her piggy bank at the start of the exercise. Last two months have gone into her account, and that money is untouched so far. She has also put some of her current money aside for our holiday in Florida next year. So I reckon she's doing pretty well so far.

Incidentally, the money news is on the radio while we are waiting for the school bus, so in the last couple of weeks we have had discussions on the 10% tax band and rights issues, so hopefully I will send a financially savvy kid off to uni in a few years (this is my main aim!).

StuartGMC · 1 June 2008 at 9:59PM

2cats1kid - Great thoughts. Our DD has her own pay-as-you-go mobile and she has a max allowance of £10 per month for calls; if no top-up is needed then it is cash in the savings (she is quids in by the way, having only needed one top up since Jan despite calling/texts to me when I'm away on business!).

As you say, teaching to understand whether expenditure is good value and hence determine where the limited resource that is money, is spent / saved / invested is the cornerstone of financial sound judgment once older.

Unfortunately DD has a distinct hatred of Bloomberg TV if it's on when she calls by the lounge, and isn't up for the 0530 business news on BBC1/News24... I'll have to see what Newsround are reporting on TV/online I guess :rolleyes:

Teaching Kids about money

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