Teaching your child the value of money

TV’s finance expert Alvin Hall on how to help your children understand the value of money

Published 18 November 2008

Teaching children about money isn’t just about helping them learn how to make it. It’s about giving them practical skills to help them manage their lives.

A young dad recently told me how he and his wife give their twin sons pocket money. They told the boys what the money could be spent on, encouraged them to save, and agreed not to give them any extra. At the supermarket, the boys saw a large bar of chocolate and eagerly asked if they could have it. Their mum asked, “Can you afford it?” The boys counted their pocket money and found it wasn’t enough. They were crestfallen, but told their mum they’d find something else they could afford. Every other parent in the queue was amazed. They’d expected the kids to use pester power to get more money. But these boys knew that there was a firm limit, so pestering wouldn’t work.

Saying “No”

Unconditional love doesn’t mean being an unlimited bank. Many parents believe that loving their children means not denying them anything and never saying “No”. But it’s better to help your child, even at a young age, learn to understand the value of what they ask for, realise that not everyone in the world is well-off, and make thoughtful choices.

Teach them to save

Be consistent
If you give your children pocket money, be clear about what they can spend it on. As they grow older, don’t be afraid to change the rules, making them responsible for paying for essential things. Both parents should negotiate the rules and stick to them.
Give children an incentive to save
When my friends’ daughter wanted a music player, they asked her to save up her pocket money to pay towards it. They were surprised at how focused she became on her goal. She was very proud of herself and cherished her music player more than if it’d been a present.
Take your child food shopping
Write a list of what you need and set a fixed budget — it may be more effective to bring cash so your child can see it. Let him keep track of what you spend and if you go over your budget, ask him to help select the items to put back.

·Finally, don’t under-estimate your child’s curiosity about money. These are the years he is open to learning, and these lessons are about more than just numbers.

What YOU think

"It’s important for children to learn the cost of things. Once they’re old enough for pocket money I’ll encourage them to think before they spend." Birte, mum of Leon, 4, and Marion, 1

"Show your child what you are doing to save. I put money in their account so they can earn interest and learn how banks work. If you don’t teach them, they won’t know." Rani Kaur, mum of Sarah, 18, Sonia, 14, and Amanjit, 4

"Some months the bills get on top of you, but we put away what we can afford for our kids, even if it’s only ten pence. However big or small, it will all go towards their future." Joanna, mum of Emily, 6, and Daniel, 2

"It’s hard to save in tough times but if the twins get money as gifts we put it in their accounts. They also earn £1 a fortnight for helping me tidy up." Tanya, mum of Jasmine and Dylan, both 5

Do you have an opinion on saving for the future? If so, contact us — we’d love to hear from you.

Picture: Rex

Print this article >