Recently the question “How do I teach my children to budget?” appeared in one of the many parenting Facebook groups I’m in. The majority of responses mentioned paying children to do chores (you can read what I think about chores below), so I’ve decided to share what I’m doing with my children in today’s post.
Why is financial literacy important?
We’ve all seen the TikToks of people lamenting their paycheck only lasting a few days to supplement a ‘bougie’ lifestyle, before returning back to pot noodles and extra blankets. They’re funny, because they’re relatable and a sign of the times (people are in general, especially those on a minimum wage are not earning enough to be considered a livable wage). They also speak to instant gratification culture and poor decision-making, something that I’m also guilty of.
Teaching children finciancial literacy teaches children decision-making skills, how to spend and save and make well-thought out decisions about money which can transfer to other life situations. So how do I teach financial literacy to my children?
1. Nobody gets paid for chores
Housework is one of those facts of life, it just needs to be done. Nobody gets paid for it and we are all expected to contribute to the general upkeep of the household aka family space that we share.
However, I may revist my stance in the future as I like the idea of offering children the option to do additional chores for money as there is something to be valued about money you’ve earned compared to money you’re simply given.
2. Savvy shoppers
From a young age I have included the children in our shopping trips, encouraging the development of their maths skills with rounding, adding and subtracting. I’d ask them to work out how much money we needed to pay the cashier and how much change they expected to get back – using the receipt to confirm (or correct) their predictions. This is a relatively simple idea that you can start with your children.
3. Birthday banking
If your child has a Junior ISA or Junior Savings Account, you could give them the option of saving any money they are gifted. Since I was a child, my mother would have us put 50% of our gifted money into our bank accounts and the other 50% could be spent on anything we pleased. It was a joy seeing the savings in my bank account increase on a yearly basis, and I do the same with my children.
4. Holiday budgeting
Family holidays are very rarely ‘family’ holidays when children are young, often it’s a balance between activities for children and activites for the parents. As a single parent on a tight budget, it’s important that I stick to my budgets for meals and snacks throughout the day. I like to include the children in these decisions, so I may give them a budget of £10 for a meal and they can choose how to spend it. It gives them the opportunity to really do some decision-making – Do I really want desert or do I want to save my money to get an ice-cream when we go to the beach later? Any money that the children have left over at the end of the holiday can be spent on souvenirs.
5. Save and spend
Allowances encourage children to spend and save. My children get a small allowance each week that they can use to spend on extra snacks, sometimes they pool their money together to get a snack they both really want to share. Other times they will forgo their extra snacks in order to save up for a toy. They both have little treasure chests they keep their money in and their favourite activity on a Friday afternoon is counting how much pocket money they have to spend over the weekend.