What age should we teach children about money?

Watch our webinar – and read the key points below.

Parents are anxious to have their children learn about money. As we analyse in this webinar, parents’ motives are diverse: there is a general trend to reduce education to a set of skills and money management is one of them; they want their children to be ready for their adult life, i.e. ready for college, ready for work, ready to retire and… ready for money management; they may also wish their children to stop nagging for more toys and stuff. But these motives reduce human life as consumer/earner/saver… isn’t life much more than that ? Shouldn’t raising a human being be more than teaching skills ?

Parents also rely on ‘experts‘ as they don’t trust their own parenting abilities, but children – and money management is no exception – mostly learn from watching their parents’ behaviour. The first takeaway from the webinar is that parents are role-models: by analysing our behaviour as adults with children’s eyes, we can check what we do, and encourage good money habits. What will our child learn if we lose our temper each time we fill in our tax return? … that taxes are bad. On the other hand, for example if you always write a shopping list before going shopping and follow it at the market, your child will take it as the ‘normal’ way to spend. If your child see you budget and discuss priorities with your spouse, every month, for as long as s/he lives with you, this will have a much bigger impact than any formal lessons.

A second takeaway is to avoid monetising relationships within your family. After all, money was invented to deal with strangers we could not trust. If your child begs for attention, give him/her your time, not a toy. Your presence cannot be replaced by money. Many parents are also eager to teach their children the ‘value of money’; but aren’t natural resources and all we make from them what is valuable, because finite and in decay, unlike money that can be created over and over as soon as, for example, a bank grants a credit to someone?

Most financial education programmes for children focus on savings… but they gloss over two important aspects: financial safety and ethics. Teens and young adults face challenges such as online betting, scams, pressure to earn money quickly, high cost of life, especially for housing, high level of debts, bad advice from some influencers, etc… and learning to save will not equip them with the critical mind to face financial dangers. Likewise saving coins in a piggy bank may be nice… but does not prepare them to a world where money is digital, and where influencers tell them to invest in crypto. Our second takeaway is that parents should instill ethics (honesty, for instance) and critical thinking using daily life situations – from giving the right change, to pointing out selling tricks, taking time to decide before spending, talking through our decisions…

Most kids get pocket money on top of what parents pay for them. So children just learn how to prioritise between one wish and another, one consumer good and another. By giving part of your budget for children to manage, they will learn real management skills. Start small: the budget for one meal, and let your child decide what to buy, check the cupboard etc. Holidays or a celebration, or going back to school expenses are other budgets you can delegate later on. As they grow older, you can also give them an allowance for their clothes, outings, lunches, etc. The more they learn with real situations, while still under your care, the readier they will be to manage a salary. Also keep in mind that each child is different, so adapt how you involve them in financial situations to their natural behaviour. More tips… watch our webinar.

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