How to help your kids to have a good relationship with money

Learning how to handle money is one of the most important skills we learn!

We carry through a lot of the habits we learn as children into our adult lives. Teaching children about money from an early age helps them manage their finances as they get older and develop good habits. But where do you start? Our friends at Legal & General, sponsors of the Saver badge for Guides, helped us come up with some top tips for how you can help children of all ages.

1) Talk about it

Talking about money openly in your family is one of the most helpful things you can do, particularly with the rising cost of living. It shows that it’s ok to talk about money, and that it’s not a topic that’s ‘just for grown-ups’. For younger children, this can be as simple as talking out loud about different food options in the supermarket. You could point out how different brands are different prices, even though the food is the same. You can talk about your favourites, and why you spend more on some things than others.

Older children and teenagers can also get involved with bigger money conversations. Why not include them in carrying out responsibilities too? If you can, you could give them a specific amount of money and challenge them to buy the groceries with this for a family meal. This will give them an insight into costs and budgeting. 

2) Pocket money

Not everyone can afford to give their child pocket money or wants to. If you do though, regardless of how much you decide to give, what’s important is keeping the rules consistent. Make sure that your child knows how much they’ll get and how often.

Also, teach them the rules about needs versus wants. If they’re saving up for a particular item – ask them whether they need it, or could they get a cheaper one? Or ask them to tell you how they will save up for it. If they want the latest fashions – could they find the same thing in a charity shop? Teaching them how to adapt will help them in later life.

3) Reducing costs

With energy costs on the increase, you can teach children about how little changes can make a big difference. For example, not leaving a phone charger plugged in the whole time will reduce costs. If you’ve got a smart meter, help them find out which electrical appliances use the most energy – although unplugging the fridge or freezer is not recommended! Even if you haven’t got a smart meter, ask your children to gauge how fast the readings rise on the electric meter when certain items are plugged in.

4) Save, save, save!

While you’re covering the basics, remember to focus on good money habits you’d like to encourage. We all know how important it is to save money, but all of us have struggled with impulse control at some point. For children, it’s even harder to resist the temptation to spend right away.

There are lots of ways to help. For younger children using piggy banks, consider setting up a second pot. Explain that every time they get pocket money, a small amount of it will always go into the ‘savings’ pot. They can then choose whether to spend or save the rest. Seeing how small amounts of money soon add up will help them understand the benefits of saving, and they may well choose to save more than they spend. For children who find it difficult or frustrating, you can set a date in the future for when they’re allowed to open the second pot and get a treat with all their savings.

For older children and teenagers, it’s great to let them have a little more control, but you can still support them to develop good habits. Encourage them to jot down a budget so that they can track their spending and saving, and take a look at it with them every week or month. You can chat through any savings goals they have and ask them why they want to spend their money on certain things. The aim isn’t to tell them what to do! It’s to help them think about their spending, and to carefully evaluate decisions.

Guides can practice their saving skills with the Saver badge! With this badge, girls can learn how to manage their schedules, set a budget, and save energy.

Whatever money rules you decide to set up, the most important things are to keep them consistent, and to let your child know that they can always talk to you. If they ever do overspend, let them know that it’s ok. You’re here to help them understand how it happened and make a plan for the future.