As summer holidays begin in the UK, the Money and Pensions Service (MaPS) encouraged parents to teach their children about money, offering six tips for the six weeks of the break.
Teaching money management at home is crucial, but MaPS research reveals that only 1 in 4 (24 per cent) children have received a meaningful financial education at home. Since 2016, there has been a significant rise in children's use of debit cards and online bank accounts. Additionally, some parents are less familiar with the digital platforms their children use.
While digital money offers benefits, it also poses risks, exposing children and young people to financial harms earlier. MaPS’ digital tool, Talk Learn Do, available on their website, provides parents and guardians with free, simple guidance, including fun family activities. The content is designed to help children develop good money habits that will benefit them throughout their lives.
To help parents and guardians make the most of the six-week summer holiday, MaPS has developed six tips to inspire and teach children about money:
Start Early: It’s never too early to start teaching your children about money. MaPS research shows that children begin developing money management skills, knowledge, attitudes, and behaviors between the ages of three and seven. These skills continue to develop through childhood and the teenage years. You are the most important influence on your children’s attitudes towards money. Better financial understanding comes from enhanced conversations. Talk to them!
Discuss Digital: The way children learn about money has evolved with digital platforms playing an increasingly influential role. With the decline in cash usage, children are less exposed to physical money exchanges. Your children’s understanding of the value of money is shaped by these new interactions, necessitating a conversation about digital money. Learn how to have a digital money conversation.
Get Them Involved: Most children (91 per cent) already have some responsibility for how they spend their money. One way to increase this is by involving them in the weekly food shop. Children can help make the shopping list by checking what’s already in the cupboards and what’s running low. Give them a small amount of money to spend in the supermarket and explain that the food they choose needs to be suitable for your family size for a week.
Make Rules and Stick to Them: Only around a third of parents or carers (35 per cent) say they set rules about how their child’s money is spent. When teaching children about money for the first time, it’s important to set and stick to rules. One way to do this is to set a maximum budget within their pocket money for luxuries each week. Evidence shows that even small amounts of regularly received pocket money increase children’s ability to budget. Sticking to rules and giving pocket money can also reduce pestering in the long run.
All the steps mentioned, from having conversations to giving responsibility, will have a huge positive impact, especially when combined.
