In my teens and early 20’s my spending habits were dire and after a bankruptcy 5 years ago I have been looking at ways in which to support good spending habits for my children and looking at when is the right time to start teaching my children about financial matters? And, for that matter, what exactly should I be teaching them?
It seems to me that it’s a case of the earlier the better. That’s not to say that you should be giving your three year old in-depth lessons in economics or accountancy, or awarding them a credit rating, but it’s important to start introducing the concept of money as early as possible – albeit in a fun, subliminal way.
During the early years, it’s easy to introduce your little ones to the concept of money through play-based activities and even everyday tasks. I always try and integrate shop or restaurant situations into my playtime with Joshua (who’s three), introducing him to the concept of paying for things rather than being given them for free (which naturally happens to him in real life, he is a three year old after all!)
The next stage is to start taking them along to the shops, bank and cash point with you and explain what’s going on (this is especially important at the ATM as you don’t want your child thinking that the magic box will produce money for them whenever they want!)
When they start getting a little bit older, you’ll probably want to give your child their own allowance, or pocket money. When this happens, take them along to the bank and open them their own special current account. This will allow you to teach them about saving, banking and even interest, and should encourage them to get into good habits that will stay with them for a lifetime.
By the time they reach early teens, it’s crucial that you start introducing and enforcing the concept of saving. Whilst this should already have been instilled from an early age, it’s now more important than ever as your no-longer-so-little ones will have more and more places that they want to go, things they want to see, and things that they just have to buy. Although you don’t want to seem like the bad guy, it’s important that you set and maintain boundaries – if they can get everything they want now, regardless of whether they can afford it, it will set a very worrying precedent for the future and could make for a less than perfect credit rating in a few years time!
Speaking of which, when they get older, it’s time to start teaching them about credit, lending and how their decisions now will affect their futures. It may seem so far away but those running up a bad credit rating during their late teens and early twenties could easily impact on their chances of them achieving important life goals, such as owning their own home, in the future and in my 20’s I don’t think I did realise how important this actually was, it did come back to bite me.
Having recently downloaded my own credit report from https://www.creditexpert.co.uk/advice/credit-rating I have to say I am so very shocked, I had presumed that my bankruptcy 5 years ago had infact ruined any chances of having a good credit rating and in fact I had not realised at just what accounts were also looked at in terms of your credit rating .. Which was handy to know, such as mobile phones and even energy suppliers! .. Having only just found this out in my 30’s I do intend to relay this to Beth in the coming years as for me forewarned is forearmed!
I hope then when they are ready to make their own major financial decisions and commitments – their first house or car, their wedding, and even starting their own families, they will be in far better stead to make informed decisions in a far better way than I did in the past.