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‘Talk Money Week’ is sponsored by the DWP to ensure people have the guidance and access to information that will enable them to make effective financial decisions.  Of course during a global pandemic with all the uncertainty and immense impact of lockdown on the economic climate, thinking and talking about money is at the forefront of many people’s minds.

I tend to look at most topics through the eyes of a parent.  How can we effectively teach children the value of money?  The foundations of financial literacy ideally need to be sown from a young age.

The responsibility for teaching children the value of money and how to manage it mostly lies with parents, so what is the best approach?

Some of this may seem obvious but here are the steps broken down:


What is money?

Young children learn most effectively through play, particularly imaginary play.  Set up a little corner of your home with a pretend shop or restaurant, including pretend money and a cash register.

From as young as three, as they start asking more questions, show them your coins, notes and credit/debit cards.  They need to be familiar with different amounts and practice regularly going over the sizes and values of coins or notes.

Once they get to school, learning about money (both coins and notes) is of course part of the numeracy curriculum.  The trouble today is that we pay for most things with plastic cards and even by flashing our phone, so they don’t see even see us handling money in the way that we did when we were children.  Coronavirus and the spread of infection has fast tracked the move to digitalising everything relating to money, less cash is exchanging hands and physical banks are closing on local high streets.  Children won’t even be able to see banks in the street and ask what they are for.


What do we use money for?

Most children have very little concept of the value of money and seem to think there is an endless supply on our credit card or through the hole in the wall.  They may know that when you need things like food or clothes, you walk into a shop or look online, select the items and leave.

Ask your child if they can brainstorm all the things that we spend money on.  There is so much we use money for that they don’t physically see, such as gas, electricity, water and insurance.


Where does money come from?

Talk to your children about the concept that we need to work to earn money and discuss the range of possible jobs.  As they get older, you can set up opportunities for them to earn their own money for extra special   jobs they do in the home.  I don’t personally recommend paying children to do basic chores like making their beds or clearing the table. 


What is the value of money?

Even once they understand what money looks like, where we get it from and what we use it for, probably the hardest element is understanding its value.  The only way to work on this is through experience. Take them to the shops or search for a product online and research varied prices.  Explain to them the impact of enticing adverts, marketing, buy one get one free offers etc. For example, is it always cheaper to buy multi packs than individual items?  When one of my daughters was begging me for an over-priced doll she had seen in an advert, I took her to a toy shop to see it in the flesh and even she agreed it looked nothing like it did on TV. I encourage my older children to do the online family food or grocery shop and compare the cost per kilo or litre. 

When my kids were younger I used to give all 4 of them the same amount on a day out and it was interesting to observe their spending patterns.  One child tended to spend it all within 30 minutes, the middle two clubbed together and shared everything they bought, whilst the fourth took the entire amount home. 


The difference between want and need

Teaching children the difference between ’want and ‘need’ takes time.  They probably feel like they ‘need’ lots of things and they don’t understand why you wouldn’t just buy it.  ‘Pester power’ is very common amongst children today where instant gratification is the norm. There will need to be lots of regular conversations and making conscious decisions around what is the difference between things they want because they like them and things that are actually essential.  Teaching them moderation and self -control when they are young is an amazing life skill.


Managing their own money

How much money you give your children and from what age is personal but I highly recommend that even from primary school age, they receive small amounts of pocket money.  As they move into the teenage years and become more independent, rather than giving them money each time they go out, agree on a weekly allowance.  Trust them to determine how to spend it themselves.

It can be really helpful to introduce the idea of putting pocket money or allowances into 3 different pots: spending, saving and sharing.  Role-model for your children giving money to charity and buying presents for others. In general, they can learn how to save money or the process of saving up money to buy a gift for a friend or family member, they will discover that giving can feel better than receiving.

Living through a global pandemic has provided the ideal opportunity to truly appreciate what we have, redefine what is important and also to model volunteering and giving back to the community.


Consider your family values

I always say that about 80% of parenting is modelling and children learn so much about money and materialism from our example and spending patterns.  If you want your children to be less entitled and materialistic, be very conscious of  the example you set.

Regularly talk about what you can be grateful for as a family. You could even have a ‘gratitude’ jar or journal where you jot down thoughts on paper.  Practicing gratitude can powerfully impact children’s mood and attitude. Try not to give your children too many material rewards, instead acknowledge and appreciate what they do well through descriptive praise. Sharing family experiences and special time together can be more meaningful rewards to work towards.

The greatest gift you can give your child is undivided attention.