Preparing your child for adult life involves teaching a wide range of skills and knowledge, from showing them how to be resilient to helping them to manage their own money. The current cost of living crisis is an unwelcome reminder that good money habits are essential to help to try and manage finances as an adult.
The earlier you start teaching your child about the value of money and using money, the faster they will develop a foundation of knowledge to build upon. There are many ways to help your child become more financially savvy, from asking them to pay for items in shops, to setting up a bank account or savings account.
Here are some of the most effective ways to help your children develop good money habits:
Talk about money matters with your child
Having regular conversations with your child and talking about your finances in front of your child is important to normalise it into their lives. While you do not want your child to start worrying about money at an early age, it is good to build an understanding of how savings, mortgages, and bills work, so they are better prepared for when they become financially independent.
Many young adults get into debt with credit cards and store cards without realising the long-term impact the high-interest rates will have on their life. The temptation to take out a loan for a car, or buy designer clothes and other items when they are old enough to be approved for a credit card or loan, could give them a very bad starting point in adult life. Therefore, it is so important to talk about the long-term consequences of taking out credit cards and loans before they reach the age of temptation.
Let them earn money
Even from an early age such as 4 or 5, you can give your child the opportunity to earn some pocket money by doing small chores. As they get older, the responsibilities can expand so that they get the experience of how work is required to obtain an income. Helping around the house, tidying their room, or washing the car can all come in useful to you, while also teaching your kids about earning money.
Set up a savings account
Once your child has a system in place where they are able to earn some money, you can open up a savings account for them to pay their earnings into. Even adding small deposits into a savings account can incentivise children into building up their savings. Getting into the habit of saving up for a few months to buy a toy/game that they want will show them that savings are the way to buy the things they want, rather than taking out credit in the future.
The Central Liverpool Credit Union provides a Young Savers account, which is ideal for giving your child the right financial start in life.
Getting it set up is easy and it will help prepare your child for good financial management in the future. Apply here today.