By: Mark Beresford Britannia International

How to help your children to understand money?

Getting your children into the right financial habits can never start early enough. The thought of introducing your children to money may seem a little daunting but it is important for them to understand how important money is, even from a young age, as it can build a strong foundation and assist them in developing the right financial habits for later in life.

Here are some simple tips to help them understand whilst having fun along the way.

Get a Piggy Bank

This might seem a little obvious but children love to receive gifts. Why not get them a piggy bank and encourage them to save any small change that you have in your purse or lying around the home. It will help them understand the different types and denominations of coins and can help with counting and numeric skills.

Play Shop

Children also enjoy playing shop and this can be great way for them to understand how money works through the exchange of goods. This can be done by simple role play - acting out the role of the shopkeeper - and will help children understand the value of different items and that things come at different prices.

For older children

Give them pocket money

Giving your children pocket money is a great early way for them to manage their own finances and also helps them to develop their own independence. There are several ways you can do this either by a weekly or monthly allowance that allows them to manage their money over a period of time or pocket money could be used as a reward for a hard days work or simple chore such as cleaning the car or cutting the grass. And you also benefit by having a nice shiny car or stripy lawn! ??

Budgeting

By giving children pocket money this also allows an opportunity for teaching them how to budget and make their money last for a period of time or simply go further. By being consistent in how you give out pocket money, and always giving it on the same day, this will help them get used to receiving a regular income in very much the same way as we adults receive our monthly or weekly pay packet. By sticking to a regular routine and not giving in this will help your child understand the benefit of budgeting.

Helping children to save

Whilst spending money might initially be seen as the 'fun' bit it's also important to introduce the concept of saving. By totting up all of the coins in the piggy bank it's a good start and you could also explain that by saving up some of their pocket money they will be able to purchase more exciting and expensive items such as a computer game. You could show this visually by creating a chart where by the child could track progress against their goal. Matching the amount of what your child has saved could encourage this further.

Once your child has grasped the basics of saving it might be a good time to open a savings account. By regularly dropping in at your local branch and depositing their savings they will soon see the money build up their account and understand that the more they save the more they will earn. By opening a savings account they will also understand interest rates and the different types of financial products available.