Children will be looking forward to getting a seasonal boost to their piggy banks this Christmas. Over the past year the world has been in financial turmoil and the phrase ‘credit crunch’ has become a household expression. It’s even entered my five-year-old daughter’s vocabulary. She noticed that the ‘tooth fairy’ had given her big sister 50p instead of £1 when she lost yet another tooth and said soothingly: “Don’t worry it’s because of the crunch.” We all know that money doesn’t grow on trees but how and when should you teach your kids about the value of money?

Children are naturally curious about money so it makes sense to familiarise them early on. “Many children think it comes from Mum and Dad’s pockets and don’t realise that it has been earned through hard work and that you can only spend what you earn,” says Sarah Price, Editor of moneyformums.co.uk, a finance website for mums. “Collect coins and look at them together. Sort them by colour or value,” says Price. The easiest way to introduce money is through games and play. My children have always loved playing ‘shops’ so harness that interest but make it real. Help them to familiarise themselves with the cost of things. If they are the shop keeper ask the value of certain items as you may find that a cauliflower costs £100! 

Pop to the Shops by Orchard Toys £9.

POCKET MONEY gives children a sense of independence and. In 2008 children in Greater London were given an average of £8.47 a week, according to a survey by Halifax. One parent I know gives their children the same weekly amount as their ages – so Lucy gets £6 and Harry £9. “The trick with pocket money is to be consistent; if a child runs out of money during the week don’t give them anymore as they need to learn that once it’s gone, it’s gone,” suggests Price, Editor of moneyformums.co.uk. Don’t forget also to teach your kids about spending. “The purpose of money is after all to spend it. Encourage them to save for something they really want,” says online children’s savings guide c myeggnest.com. Besides saving and spending, encourage your child to put some money aside to help others i.e. donating to a charity or buying their friends popcorn at the cinema.

Open a bank account As soon as you register the birth of your child open an account for them. You are bound to be given cheques for even the youngest of children. You can open tax-free children’s savings accounts for as little as £1. My kids love going to the building society to deposit their birthday money and revel in who’s saved the most. Once they reach 11 most banks will give your child a cash card with a daily limit. Do keep an eye on the interest your kids are being paid though. Best current rate – Halifax’s Children’s Regular Saver. Pay in between £10-100 every month and you will get a whopping 6% fixed for a year. See halifax.co.uk

USEFUL RESOURCES

The Cool Head Company runs great courses for children (and adults) on the world of money, finance and business. Your budding entrepreneur (8–11 or 12–14 years) will be entertained during the holidays learning about money through games like Dragons’ Den, Who Wants to be a Zillionaire, filming an advert or on money-inspired trips to places like the Bank of England. See coolheadcompany.co.uk. 

OTHER WEBSITES

Money games funtosave.org

Family finances moneyformums.co.uk

aving advice mynestegg.com

Teaching kids about finance pfeg.org