In my house, my children are naturally interested in money / mercenary little beasts.
They are desperate to work out how many weeks, at £5 a week pocket money, it will take to afford a Nintendo 3DS.
They are quite keen to know how much pocket money they have in relation to peers.
My eldest has been known to sit me down at my laptop so I can work in order to afford to buy him something in particular.
So given this natural interest, it should be straight forward to teach them the value of money, the benefits of saving, etc.
What I’ve found is that teaching them these things has to be in relation to something tangible. For example, you have to save up if you want to do X or afford Y.
I’ve also found it is possible to project these things into the future, although obviously until they are older, it’s hard to know how successful these little lessons have been.
As it’s #MyMoneyWeek, the personal finance education week, I thought I’d ask my own children what they think about money.
They are six and three. Have a watch (and forgive them their dazed morningly-ness)
As you can see, the six-year old is quite single-minded right now – everything is valued according to its worth in the world of games. They both seem to understand, though, that money is important for necessities, food and drink, as well as just stuff they want (toys and games).
They both also unequivocally answer “yes” to the question “Is money worth saving?” and while when asked why, the older one related this back to being able to buy more games (SO proud I am), when I asked the younger one why money is worth saving, he said: “More pounds”. Either this was a random simple yet on-the-mark answer, or on some level he understands that having more pounds is in and of itself a good thing, not just in relation to specifically what you want to buy or own with those pounds, but just for their potential in the future.
OK he didn’t say all that last bit – but I’m sure he was thinking it ?
And it’s interesting that the older one related the value of saving back to things he wants. This is something to go on. Teaching the value of anything is effective if it relates to something meaningful, loved or valued. So I can use the interest in games – and frequently do – to help him with his maths and also his understanding of why it is good to save. You can have bigger, better dragons the more coins you save. You only get more coins if you have more money. So you need to save up to win big in the games and become Lord and Master of Everything. I’m afraid this is the kind of logic that will work with him.
This idea of teaching children about money through their digital experience is fortunately not lost on the financial services industry.
A new crypto piggy bank, Pigzbe, was recently launched. Pigzbe, designed for ages six and up, pairs a physical device with an app that turns gifting and saving into a game, also allowing families to transfer money globally. It runs on the new family-friendly cryptocurrency called Wollo, which is specifically designed for small transactions for parents to reward chores or give pocket money.
There are other pocket money based apps out there, such as GoHenry, which we have for our six-year old, although I have to say we rarely use it.
Peter Bradshaw, Director for Selectapension, says: “We are hugely preoccupied about whether millennials save enough to cover the cost of retirement but the conversation about basic money management needs to start much earlier on in life. Obviously, retirement is unlikely to be high on the agenda for children or young people, but better financial education early on means that concepts like the importance of long term saving can be introduced effectively – provided it’s in an engaging way.”
“The younger generation are digital natives. It is the main way in which they engage with brands, campaigns and socially. Free online tools, like Pension Monster, can help start the planning journey and show it’s not that difficult.”
I doubt whether I’d be able to engage them in pensions just yet. But telling them some people in retirement only have £22 a day to live on – when they are happy to spaff that in Sainsburys on Pokemon cards, might get the cogs turning a little.
And maybe showing them the balance of their junior ISAs – which are accumulating nicely – and junior SIPPs (when we open them) will motivate them to think about what they will do with that money when they are 18 now, reducing the chances of them spending it all on cars.
As well as engaging them through digital games etc, it’s important to realise the positive impact of just having regular little conversations about money with your kids. Healthy, positive conversations about working to earn what you want, reminding them of the future benefits of saving now while they are whining about wanting something or other, etc. It will sink in.
I’m interested to know how my childrens’ answers to these questions might change over time. So I will ask them again.
If you are interested in your own childrens’ attitudes to money, and how to get them thinking about it, check out the My Money Week resources, here.
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