Don’t let children break the bank by teaching them the value of money

Many people complain they just aren’t ‘good with money’. If you want your children to understand its value, start teaching them as young as seven, writes Sharon Ni Chonchúir

DAVID and Victoria Beckham’s eldest son, Brooklyn, 15, we learnt recently, is earning pocket money by working in a café at weekends. Apparently, the Beckhams want to instill an appreciation for the value of money in their children. So if multi-millionaire parents are encouraging financial savvy in their children, what should the rest of us be doing?

Marah Curtin, of Cents for Kids (www.davy.ie/private-clients/insights/cents-for-kids), an initiative for teaching financial literacy to children, says we should start early.

“An organisation called UK Money Advice found that children’s financial habits are set by the age of seven and that parents are the number one influence on children’s financial behaviour,” she says. “We do it whether we’re making an intentional effort or not, so it’s best to do it in a conscious way.”

In supermarkets, children see parents plucking items from the shelves. “Make a list with your child before you go to the shops, instead,” says Marah. “Explain that you have a limited amount of money to spend and show them how you prioritise that spending. Children as young as three can understand concepts like saving, spending and sharing, as well as planning ahead and setting limits.”

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As children get older, involve them more often in money decision-making, says John Lowe, of www.themoneydoctor.ie. “If you don’t discuss money with them, they won’t learn about it,” he says. “Every time money is earned, spent, donated, borrowed or saved presents an opportunity for you to teach.”

Marah experienced this growing up in a wealthy family. “I remember being angry with my father at refusing me something when I was in my teens,” she says. “I knew he could well afford it. But he took that opportunity to teach me that while he was rich, at the end of the day, I was poor. He knew I probably wouldn’t have as much money as he did when I grew up, so I had to get used to spending in a sensible way.”

John would congratulate Marah’s father on his actions. “All spending involves deciding between needs and wants,” he says. “Needs must come first and children who understand this will be better able to cope with the world.”

Pocket money can be a useful tool in teaching children about money. “It’s a good idea to introduce pocket money, relative to the age of the child,” says Colman Noctor, child psychotherapist and author of Cop On: What it is and why your child needs it to survive and thrive in today’s world. “Although I’m not a fan of paying children to do household chores; that should come with playing your part in family life.”

Don’t let children break the bank by teaching them the value of money

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Marah is ambivalent about chores. “Money is earned through working,” she says. “I’m all for encouraging children to think opportunistically, by identifying extra work they can do around the house. This will be valuable for them in their future working lives, as they probably won’t have jobs for life. They’ll have to be creative.”

She also says to give a consistent amount of pocket money, as it allows them to plan ahead and save for goals. And let children spend their money as they see fit. “Buyer’s remorse is a lesson that can only be learned when you’ve wasted your own money,” says Marah. “It doesn’t have the same impact if you’re spending someone else’s, so don’t bail them out if they make mistakes.”

Colman agrees. “Managing money teaches foresight and planning and about actions and consequences,” he says. “There’s no value in parents being a bottomless pit.”

Our experts have useful tips for saving. “Set achievable goals,” says Marah. “If it takes too long to save for something, kids can lose interest. So, if they want to save for a big value item, perhaps you could agree to meet them halfway.”

She isn’t sure about bank or credit union accounts. “Children think concretely and a bank account is much more distant than a piggy bank,” she says. “I think it’s better for them to handle money and have access to it.”

John is equally emphatic about teaching children about borrowing. “Teaching children the difference between good and bad debt is vital, if they are to avoid the pitfalls of borrowing more than is sensible,” he says.

He lent money to his children and made sure they paid it back in full. “I wanted them to realise that borrowing needs to be worth it,” he says.

John, Marah and Colman think the Beckhams are onto something by encouraging Brooklyn to work. “I worked when I was 16 and learned lots from making my own money,” says Colman. “It can really add to the development of maturity.”

For Marah, it’s about developing the entrepreneurial spirit. “Whether it’s baby-sitting or selling lemonade, I’ve always pointed out the opportunities for making money to my son,” she says.

We may not all be able to bend it like Beckham, but by following his example, we can ensure our children eventually stop withdrawing money from the bank of Mum and Dad.

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The smart money’s on teaching children early

1. Use grocery shopping to show children that they can’t have anything that takes their fancy. Tell them that you don’t have extra money for that packet of biscuits.

2. Pocket money is a good idea.Tell your children to save up their pocket money if they want to buy something.

3. Let children spend their pocket money as they see fit. Let them learn from their mistakes.

4. If you lend them money for something, always ask for the money back, so they learn that debt must be repaid.

5. It’s great for teenagers to get a job, whether its a Saturday job, babysitting, cutting grass. It teaches them that money doesn’t come easily.

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