12 November 2014

Teaching your children about money: 4-7 year olds

It’s never too early to teach your children the value of saving and get them used to handling money. 

One of the world’s most successful businessmen, Warren Buffett, started his first business aged just six, and believes the mistake many parents make is to leave it until their kids are teenagers before teaching them about money.

In the first of a series looking at ways parents can educate their children, we focus on ages 4-7, showing ways you can help your little ones understand and appreciate the value of money. 

Nationwide Education also has a range of tips, factsheets and interactive games to guide you.

Save up pocket money

If you give your children pocket money, encourage them to save it towards a toy or game they want rather than spending it all at once. 

Teach them that while it may take longer to obtain, it's worth the wait if it's something they really want. You could also try to make saving more fun with mini rewards the closer they get to their final target or, if you can, by promising to match whatever they have saved. 

They can save their money by putting it in a piggy bank or savings account.

Open a savings account

One of the best ways of teaching your kids about money is by opening a children’s savings account on their behalf. This can help give them an incentive to save up some of their pocket money, as well as birthday and Christmas money, and gets them into the habit of saving at a young age. 

Who knows- it could even provide them with enough cash to buy their first car or put a deposit on their first home, so they don’t have to rely on the bank of Mum and Dad in the future! 

Practice counting money

When your child empties their piggy bank get them to separate the coins into 2ps, 5ps, 10ps and so on, and put them into piles that add up to £1.

Then ask them to count up the overall total and consider what they could afford to buy with the amount they have.

You could also ask them which coins they would use to make 75p, and how many 50ps they would need to buy a toy costing £2.50.

Set up a pretend shop

You could also play games with your children that involve money, such as setting up a pretend store or restaurant but using real notes and coins where possible.

Your child can be the shopkeeper and price up items, whether it’s their own toys or food from your cupboards. Pay more than the exact amount for the goods to see if they can work out how much change to give you.

Set a good example

The way you talk about money can leave a lasting impression on your children. Try to show them the importance of spending wisely, and if you have money worries take steps to stop it spiralling out of control.

Consider charities

Remember, money isn't everything. If you can, try to teach them the importance of giving- perhaps by donating some of their pocket money to charity. Understanding those in need could help them appreciate the value of money.

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