Basic money lessons will stand to kids of all ages
As parents, we all agree it is important to teach our children about money and how to manageit.
But in reality, it is a subject many are reluctant to broach. Some parents fear that it will cause their children to worry about money, others just don't like the idea of children thinking about it at all. But with no real in-depth money management taught in schools, it falls to parents to teach their children and send them out into the world with an ability to take care of their finances.
Parents shouldn't be concerned about over-burdening their offspring. Children notice the importance of money in all our lives and are curious about it.
There are some concepts that can be understood by even young children. Spending vs saving, budgets, credit and interest should all be explained to children in the home, as well as teaching them to manage a bank account. With school-age children now at a loose end for the summer holidays, what better time to start teaching them about the world of money.
Children of this age will easily pick up an understanding of saving and the benefits of building money up. Give them two jars or piggy banks, one marked 'Spend' and one 'Save'.
Give them a small amount of weekly pocket money and encourage them to divide it into the 'Spend' jar that they can use straight away and the 'Save' jar to keep.
If you are going on a family holiday, explain they will have their savings then, or else plan a treat day toward the end of the holidays when they can use that money. A nice way to start teaching about charity is to have a third piggy bank, called 'Give'.
Young children have a great sense of fairness; explain situations where other children are less fortunate and allow your son or daughter to choose a charity where they can donate their money.
Slightly older children can start to learn about how money is managed for the whole family. Explain the idea of budgeting, and show them how money has to be divided up for bills, food shopping and expenditure like their uniforms and books for back to school.
Bring them with you to the supermarket and let them know what the budget is and what needs to be bought for the money.
This is a great way to make them aware of prices, you can make a game of letting them find bargains or special offers to help. Be patient with their selections!
If they do not already have a bank, credit union or post office account, make a trip out of opening one with them.
Let them keep their own deposit book so they can see their money building up. Most of the banks will have a piggy bank or other incentive for children who open an account. Ask to borrow a small amount of your child's savings, say €5.
After a week give them back €5.50 and explain the extra is the interest that you have to give them for using their money.
This way they learn that borrowing money has a cost and accumulated money can earn them more.
It is never to early to teach children that money has to be earned, so link their pocket money to small jobs around the house Particularly during the summer holidays children of this age can have a list of jobs like washing-up and hoovering to be completed in order to 'earn' their pocket money.
Children of 11 or more will have picked up some awareness of tax from what they hear in the media.
Explain that adults do not get to keep all the money they earn, and give them examples of how money that is taken in tax is used, towards roads, hospitals and schools.
If you feel your teen is mature enough, at this age they can get a debit card on their current account and learn to use it at both the ATM and in shops.
Be careful here to put accumulated savings into a separate account, the card should only be able to draw on a current account with limited funds.
If a teenager gains access to funds that parents have been accumulating for years for education, there could be disastrous consequences.
It may have made sense to save for your child's future into an account in their name, but double-check signing and access as they get older.
Older teenagers can also be signed up for internet banking and shown how to transfer money between accounts and pay bills online.
Your child is no doubt already internet-savvy, why not set them a project to save money for the household budget.
Pick a bill such as car insurance or broadband and explain how they can use the web to compare rates and find the best deal.
You can add incentive by agreeing that they get to keep a percentage of any savings they make.
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