Good Money Habits For Your Children

Yesterday when I was writing my Parenting #ToddlersAndTeens post I suddenly realised big J is a teenager. He's 13 years old age and it’s scary just how quickly he has grown up. One minute he's a little boy toddling around depending on us for everything, and the next he's this person who seems to be able to live his own life and the need for us is greatly reduced.
As you will know little J is a toddler and it's hard to believe that one day he will be a teenager too. You think that day will never come, but it will it will come much sooner than you think! That’s why it’s never too early to start teaching your children good money habits and preparing them for when they head off into the big, wide world.

Big J enjoying a trip to cinema with friends, using his own pocket money.

I got some great tips from Mrs Moneypenny (you might have seen her on Superscrimpers on Channel 4!) and found them really helpful.
So, if you’re not quite sure where to start, here are some of the most important money habits to teach your children:

We waited until big J was 13 until we introduced pocket money

Introducing Pocket Money

Its only recently big J has started to receive pocket money. We had thought about it in the past but never really got round to it. He never really needed pocket money but as he has got older we decided it was the right time. He enjoys going he cinema with his friends or visiting the local astro turf pitches so its nice for him to know he has money there if he needs it.

I think choosing the right amount is a very personal decision and you must think about what you can afford each week or month. It has to be a realistic amount, so you should think about what your child might need to spend their money on and come to a figure that you feel comfortable with.
It’s inevitable that some parents will give their children very large sums of money each week, whilst others will stick to the bare minimum. It's important to let your child know that they should not feel pressured by how much pocket money their friends are getting, or how much the 'average’ child is reported to receive.
If you’re still a little unsure, Mrs Moneypenny suggests that a good rule of thumb is to give your child £1 per year of their life. So, if you’re little one is 10, give them £10 per week, when they turn 11, up their pocket money to £11.
Saving and Budgeting
As well as giving your child a sense of freedom and the ability to buy the things that they want and go to the places that they want to go, pocket money is a great way to teach your child how to save and budget. They say the younger they start learning these lessons, the better!
Mrs Moneypenny suggests that a good place to start is to encourage your little one to divide their pocket money by three – 1/3 to spend now, 1/3 to save for something they might want in the future, and 1/3 to give to their favourite charity.
Big J does tend to be aware of how much he has and how much he will need before his next payout and he does quite well budgeting, most of the time. I do like Mrs Moneypenny's idea of dividing their pocket money but I do think it is a little unrealistic to ask a 13 year old to give a 1/3 of his money to charity. As a family we give lots of money each month to charity so I wouldn't expect him to use his pocket money for this.

Sensible Spending
Whilst it may be tempting to dictate what your child can or can’t buy with their pocket money, this kind of defeats the object of them having it in the first place!
Instead, Mrs Moneypenny suggests making a short list (the keyword here is short!) of things that you absolutely won’t allow them to spend their money on. This approach will allow you to maintain a level of influence over their spending, without taking away their independence and control.
Big J like most teenagers now likes to spend his money on apps, in app purchases or xbox credit. I really don't like him spending money on virtual games as he has nothing to show for it really but I do agree that if we choose to give our children pocket money they should be allowed to spend as they please.

Introduce their credit report
Soon they will approach the age when they will be thinking about heading off to university or moving into a place of their own. It’s important that you start to familiarise them with their credit report and ensure that they understand the impact that financial mistakes can have on their ability to secure credit in the future.
If they are aware of the knock on effect that the bad financial decisions they make now will have on them in the future, they will be in a much better position when it comes to taking full control of their own finances.

I have to say that most of the time big J is really sensible with his money and I think having his own has made him appreciate the value of it. I am glad we decided to give him pocket money and he now has his own bank account.

Do you give your child pocket money? Has it made them appreciate the value of their pennies?

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