DISCUSSING money is difficult enough for adults, so when it comes to our children, the first instinct might be to avoid the topic completely.
But that is not usually what’s best for them. Research suggests that kids can grasp the very basic idea of how money works by the age of three or four, with finance habits being formed by about age seven.
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These habits will follow your child into adulthood, so talking about money and making sure they start off with the right attitude is a great gift to a little one.
Discuss money in a positive way
It is all too easy – when we see our living costs skyrocketing and finances getting tighter – to create a negative atmosphere around money in the home.
This can be absorbed by children without us even noticing, which in turn may cause them to be intimidated by money matters.
Making an effort to use positive language about money and involving your children in conversations, can make a huge difference. For example, you could ask them to help plan your spending for a family day trip.
Don’t give in to pester power
Pester power is a technique encouraged by advertisers to get kids to do their hard work for them, and it can be tricky to deal with. Kids instinctively know the exact sequence of buttons to push to get what they want, and sometimes you might find yourself caving in to repeated requests.
Children need to learn that this isn’t how the real world works – they should get used to being told “no” if something is expensive or unnecessary. Why not help them make a plan to save for what they want, instead?
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Encourage digital saving and money management
In an increasingly cashless society, coins and money boxes might not be the most useful ways to learn. Why not open them a junior bank account with their own debit card and app, and guide them through banking, saving and spending? It also means you don’t have to drum up coins for pocket money each week!
Let them make mistakes
Don’t coddle your children too much. They need to learn what it means to regret spending their money on a rubbish toy or a disgusting sweet so that they can learn to process those feelings in a healthy way, and make better choices next time.
Clare Seal’s book Five Steps to Financial Wellbeing: How changing your relationship with money can change your whole life is available now.
Views expressed in this column are those of the expert and do not reflect the views of Klarna. To learn more about Klarna visit klarna.com/uk/money-talks/
