Every parent wants to make sure that their children grow up with responsible attitudes towards money and personal finances. Precisely how you go about instilling good habits in your children can be influenced by your family’s overall financial situation, but there are some basic approaches that everyone can take. These include options such as:
- Promoting the value of working for financial reward
- Encouraging a healthy approach to saving
- Setting a good example
A new study from The Money Advice Service has highlighted the influence parents have on fostering good financial skills in their children. The MAS, which is an independent service set up by the government, commissioned behaviour experts at Cambridge University to produce the ‘Habit Formation and Learning in Young Children’ report.
The results indicate that financial habits are established by the age of seven and core behaviours which are learnt in childhood will affect financial decisions throughout life.
Of course, both good and bad habits can be passed on, so parents must not underestimate the impact which their own financial actions will have on their children.
Promoting the value of Working for Financial Reward
It is never too early for children to learn the value of working for a financial reward and the sense of responsibility which can be gained from it. Even if it is only basic chores which they are carrying out such as washing the dishes or cleaning the windows around the house, they are likely to develop a good work ethic which will set them up for the rest of their working life.
Encouraging a Healthy Approach to Saving
Helping children to learn about the value of money doesn’t need to be difficult and it can actually be fun. Getting them interested in the concept of making savings is a good start, as it is generally accepted that by the age of eight a typical child should be able to grasp all of the basics regarding how a savings account works.
Getting into the habit of putting money away will help a child to develop a responsible attitude to their own finances.
Every parent wants to make sure their children have everything that they need. However, sometimes it can be a good lesson if a child has to withdraw from their savings in order to make a purchase.
Some savings accounts are specifically designed for children and whilst some are tax-free, this does not apply to all of them. This may not matter for most people who are looking to introduce their children to the value of saving in a simple but effective way, but other families might be better suited to a more complex arrangement.
Setting a Good Example
Every parent knows that the most effective way for children to learn is by example. If your household is run in a chaotic fashion when it comes to domestic finances, you are setting the template for how things should be done in your children’s eyes.
Although in times of rising prices and spiralling household bills it might be difficult to find ways of saving money yourself, a child’s account can run on very small amounts which can still teach valuable and inexpensive lessons.
Solomun Ransish is a father of five and works for a major investment fund manager in the City Of London. He shares his own experiences for Select Property investment.