How can you encourage your children to be financially literate? The way we manage our money has much to do with our emotions and encouraging our children to discuss this will give a great basis for them to use money as an effective tool.
Start by having some fun.
Here is an idea that you can be creative with and shape to suit your children. Challenge them to think about what they might do with a given amount of money - a relatively small amount to start with. Ask them ‘What would you do with £20?’. Make sure you say ‘do’ or ‘use’ rather than spend. Their responses can give an interesting insight into their understanding of the value of money. Help your children to research actual costs online and make sure you all have a guess before discovering the actual amount.
Some children would opt to spend all the fictitious amount whilst others might choose to save it. Others might divide it up. Challenge them to play around with different options and ask how each decision would make them feel. Consider various options with this and with older children you can challenge them to look at the different things they can do if they have the specified amount of cash in their hands.
There are 5 different ways that you can use money which you have at your disposal. Use the following as discussion points with your children and then as a prompt for more research.
Spend – Spending can make us feel better and if we chose well can provide activity and options which are beneficial. Chose unadvisedly and in the long term you can feel dissatisfied.
Save- in essence, keeping your money safe so that you can return to it at a later date. Interest rates are low so in essence over time your money will be worth less.
Give- giving can make you feel good but it’s essential that young people realise that they can afford to give.
Invest-The key message is that by investing your money you can stand to make a good deal more … but you also risk losing it all.
Loan-Similarly there’s a risk to it. It can feel good loaning money to help out a friend but they may not pay you back.
Scale the amount up… How different would the decisions be if you had £20, £200 or £2,000?
Work out how long it would take if you had to earn that amount… Great maths activities to play around with here. You can use pocket money amounts or research different salaries.