How to teach your children good financial habits

One of the most important things that children need to learn is how to manage their money correctly. Establishing good financial habits in early life can lead to greater success and stability in later life. Here we look at some top ways to teach your kids about the value of money.

How to teach children good financial habits

Set a pocket money amount - For children to understand money management, it's important that they have a little money of their own to manage. Simply buying them things that they want or need won't teach them anything about personal finance. How much pocket money you give your kids is an entirely personal choice and largely depends on the age of the children. Even 50p per week is sufficient for educational purposes.

Establish financial responsibility - Make it clear to your children what you expect them to buy for themselves. For example, you will buy their clothes and food but they are responsible for any treats or socialising that they want to do.

Encourage them to save towards something - If your child wants an expensive toy or item of clothing, encourage them to save towards buying it. Help them to draw up a budget. This doesn't have to be complicated: for example - save £3 per week and you'll have enough for that new coat in two months.

Encourage them to save - As part of Christmas or birthday presents, put a little money into a savings account for them (even £5 is a great start). Let them keep track of the balance and watch the it grow. Encourage them to top it up if they have any change left over.

Provide motivation - It's surprising how quickly children can learn good financial habits if they are motivated. A good motivation for children is to create visual aids - for example, drawing a graph of their savings account, or colouring in levels of a scale to indicate how close they are to their savings target.

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