It’s never too early to implement lifelong good habits when it comes to money. Teaching your kids to be good with money won’t just ensure they can save up enough pocket money to buy what they want, it will help them throughout their lives.
When they are really young, the first thing they should have is a moneybox. Any coins they are given from grandparents or money they earn from errands can go in. When the pot gets full, it’s time to take it to the bank rather than head to the sweet shop.
As well as an ISA that they can’t touch until they are 18, your child should have their own savings account that can be accessed at any time. In this can go gift money and money-box pennies, as well as unspent pocket money. In fact, a great habit is that they hold back some of their pocket money every week by putting it in their money box to later go in the bank. This will help them throughout life to understand that at least 10% of wages should always go into savings where possible.
The Debt Issue
Children can’t get into debt for obvious reasons, but explaining to them why they should avoid it is worth doing when they reach late adolescence. When your child becomes an adult and perhaps opens their first student account or adult current account, this is the time to have a chat about credit cards and overdrafts. Those that start adulthood in debt are more likely to remain in debt throughout their lives, making this a critical time when it comes to forming good habits.
Provided they have been saving throughout their childhood they should be going off to uni with a little nest-egg anyway, which should help protect them against using a credit card when they need to make large purchases. You can also help your children understand debt by not allowing them to have birthday money or pocket money early, which is technically a form of debt in itself.
Starting good habits young will help your children enormously and the younger they start, the better relationship with money they will have throughout life