money This is a guest blog by Sara Williams. She’s a CAB advisor who runs the Debt Camel debt advice website, but here she is looking at how to talk to small children about money and what worked well with her two. Jonathan Swift, who wrote Gulliver’s Travels said “You should have money in your head, but not in your heart” and that must be how we all want our children to grow up. We want them to be sensible about saving and planning, to take care of possessions and have an eye for a bargain, but not to judge people by what they earn or presents by how much they cost. So when and how should you start talking to small children about money? PFEG, Britain’s largest financial education charity, says 11 is too late… You may feel that there’s plenty of time to worry about adult things later, that kids should just be kids. But small children are like sponges – they will be absorbing ideas about money from everywhere around them. They are likely to see 70 payday loan adverts a year on TV. They may think that money comes out of a hole in the wall when you need it; that banks can’t be trusted; and that having a credit card makes everything easier. Not a sound basis for adult life, so make sure they get good messages from you from a really early age!

Talking about money

You can’t talk directly to small children about money – they won’t understand or be interested because it’s too abstract, and if you are too serious they could end up worried. But comments about money, cost and savings can be an everyday topic from when they are toddlers:

  • “Oh look, that’s on special offer, I need some more shampoo so I’ll get two”
  • “Those boots are lovely but too expensive for me.”
  • “I’m going to get some of the money I have earned out of the bank”
  • “Things always look wonderful in adverts, they are trying to make you buy things you don’t need”.

As they get older you can introduce more concepts, initially very simply. By Year 3 or 4, you want children to know that mortgages let you buy a house, working hard at school means you will earn more when you are older and that pensions give you money when you are too old to work. I think it’s best to leave politics until the teenage years – for young children banks keep your money safe and taxes pay for roads, doctors and emptying the bins.

Money actions

Using cash is the best way for children to understand that when the money is spent, there is no more left. In today’s digital world that may seem rather impractical, but look out for times when you can leave the plastic at home and just take a purse – a trip to the swimming pool perhaps, or tea in a local cafe. When they are old enough, get them to help you check prices in the supermarket – is it always cheaper to buy the larger size bag of peas? Why is this loaf of bread more expensive and does that mean it is better? The day they rush up to you laughing at a sign that says “50p each or 3 for £1.50” you know they have got the message! J I wanted my children to realise that it’s normal for adults to save, so I had a large glass jar labelled “Holidays” where I solemnly put a £5 note each week when the kids were around. I also had a large plastic bottle that the kids would drop pennies and 5ps into. Every few months we would open it, count it up and the children took it in turn to choose what charity to give it to.

Games to play

Board games like Monopoly or Careers will have to wait until they are older, but from about three my children loved playing shops. I made little labels for their toy food or tins from the kitchen so they could set up a stall, then I would come over with some real money – but not enough to buy everything – and think out loud about what looks good, what looks cheap, what I need, what I can afford etc. Do this a few times and you may hear your child using the same phrases when she is playing with her teddies. If they have toy kitchen, design a menu for their café, so they can cook you food. If you would like a template, here is the sort of thing I used to make for my son. You can get older children interested in what you should charge for a cake: the ingredients, electricity for the oven, time to make it

What about pocket money and saving?

That’s a good idea, but until children understand what money is for and that adults save, it’s hard for them to see the point of it. And they also need a good grasp of time – a month is an impossibly long while for a five year old to understand, let alone choose to wait for something. Give them pocket money from an early age if you want, but they probably won’t be very interested in saving up for something until Year 3 at the earliest.   Do you talk to your kids about money?  What age did you start talking about?  Do you think there is a right age?  Do leave your thoughts in our comments below:

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