My children and money – your questions answered
Children start to shape their attitude towards money aged as young as seven. So whether you give them pocket money or not, you are already a huge influence on how they will spend money when they are older.
Though there are no right or wrong answers when it comes to teaching your children about money, there are a few questions that parents ask over and over again. Combining findings from research completed by The Money Advice Service, with real experiences of our own founding parents, we’ve put together some ideas that might help to answer some of your questions.
Why should I give pocket money?
Pocket money is one of the first ways children can learn the basics of managing money – a skill they’ll need for life. By letting them have pocket money you’re offering them some independence and responsibility over their own money. This gives them the experience of being able to choose how to use it and make their own decisions. One of the more important ideas to get across to is to save before you spend so they get used to a cycle of earning, saving and then spending.
At what age should I start giving my children pocket money?
A study by the Money Advice Service into ‘Habit formation and learning in young children’ shows that by the age of seven most children have grasped how to recognise the value of money and to count it out. By this age they will also have come to understand that money can be exchanged for goods and so seven or eight appears to be a good time to start giving children their own money regularly. But children are aware of money much before this and experts also acknowledge that giving money to children as young as four or five helps them to begin learning about money management.
How do you teach children and teens to save?
This is the point in financial education where you start to teach your children that just because they have a stash of money, they don’t have to immediately dispose of it. They can actually choose to save some of it and watch it turn into more money. Suggest to your children that when they are given money – be it gifts or payments for chores – the first thing they do is put some away for saving. We’ve found that around 10% is a good number.