Making Cents: Teach your child about money at their Holy Communion and it will pay off

Kids need to learn about money - what better time than when they get their first opportunity to save or spend?

My eight-year-old daughter has just had her communion and received lots of cash presents from friends and family. The money is burning a hole in her pocket, she is pestering me to take her shopping with it. We have never discussed money much with her, she doesn’t get pocket money but we give her money as she needs it for days out, etc. I think this is a good opportunity to start teaching her how to manage money but I don’t really know where to start.

That is a great idea. It is never too early to start teaching children about money, learning to budget is a valuable life skill, and your daughter’s current riches give you an ideal opportunity to get her thinking about spending and saving.

One way to encourage her to think about how and when she spends her money is to think of something a little way away in time that she would enjoy. Is there a particular treat around Christmas time she enjoys? Or if that seems too far away for her, something nice to do during the midterm or Halloween. Suggest it as a good use of some of her communion money. Point out that yes, she could go shopping and spend all her money now but if she keeps some she will have it available for this other treat in the future. This is a good way to start her thinking about the opportunity cost of spending, money spent on one thing is then no longer available for anything else. See if you can agree a split of the money, with an agreed amount to be spent now and the rest to be saved.

If she doesn’t already have one, this is the perfect opportunity for her to open her own savings account. There are a number of options available, there are various junior saver accounts available from high street banks, credit unions and the post office. If you go with the post office, you can open an account from home through their An Post Money app. Irish credit unions just ran their annual Junior Savers Week and many credit unions run a Junior Savers Reward Scheme. Junior Savers Sticker cards are made available for young members allowing them to track their saving journey. Each time a child lodges money into their credit union account, a sticker is placed on their card, and a reward is given once they complete it.

No matter which option you choose, the important thing is your daughter has ownership of the account and the money in it. Naturally, this account should be kept completely separate from any savings you may have for her long-term future.

You mentioned you don't currently give your daughter pocket money. If you are in a position to do so, this is a great way to teach money management. If she gets a small set amount each week, she will become familiar with balancing spending and saving. To encourage the latter, perhaps you could agree on a reward for saving, be it a treat or you adding to her savings if she reaches a target.

More generally, one of the easiest ways to teach children about money is to talk openly about it. If she goes food shopping with you, chat to her about how much you spend on groceries and encourage her to help you find the best value for your money. As we head toward Christmas, explain to her how much the various elements cost and talk through how you plan for the extra spending. Be very matter of fact, you don’t want her to absorb worry or anxiety about money but to give her an appreciation of how much things cost and an understanding that cost has to be factored in when making plans.

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