Teaching kids money management is crucial for building a strong foundation for their future financial independence. According to statistics, only 47% of children aged between 7-17 in the UK have received meaningful financial education, either at home or at school. This number is shockingly low and means that there are millions of young children who are left out from this education. By instilling lessons on financial education from early, parents can equip their children with the necessary skills to navigate the complexities of personal finance as they grow.

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Here are 6 key tips to help you to get started:

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Teach Basic Money Concepts

‍Make learning about saving, spending, and budgeting fun by incorporating games that engage kids' interests! Board games like Monopoly or interactive online simulations tailored for children can provide memorable learning experiences. These games entertain and introduce vital financial concepts in an enjoyable way. Parents can create discussions around strategies used during the games, reinforcing lessons about decision-making and money management.

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Involve Kids in Food Shopping

Take your children along on shopping trips to show them how you budget for groceries and manage your purchases. Explain how you create a shopping list based on needs and a budget, emphasizing the difference between necessities and luxuries. Discussing budgeting during these outings helps them understand the value of money and the importance of making informed choices. Encourage them to prioritize needs over wants and actively search for the best deals, fostering smart shopping skills they can apply in their lives.

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Create a Savings Jar

‍Encourage your kids to set savings goals, whether it's for a new toy, a video game, or a fun outing with friends. This practical savings method empowers them to save a portion of their pocket money, instilling a sense of responsibility and patience as they learn to wait for their desired items. Consider creating a colourful chart to visually track their savings progress, which enhances their motivation and sense of accomplishment as they watch their savings grow over time.

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Make Use of Financial Apps‍

Equip your teens with modern tools like GoHenry or Osper, designed specifically for young people learning about money management. These apps offer features that allow teens to budget, track expenses, and even explore investing in an age-appropriate manner. Encourage them to utilize these resources to cultivate good financial habits early on and provide guidance on using the apps effectively to reinforce lessons about spending wisely and saving consistently.

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Discuss Wants vs. Needs

‍Foster mindful spending habits by engaging in conversations distinguishing between wants and needs. Regular discussions about necessary items versus luxury purchases can improve their decision-making skills. Create scenarios for them to evaluate, prompting discussions that prepare them for future financial choices. For instance, present them with a hypothetical budget and ask them to decide how to allocate funds between various expenses, encouraging critical thinking and decision making.

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Read Personal Finance Books

Introduce children to finance-focused literature to assist their financial education. How To Handle Money by Kia Commodore is an engaging book that simplifies complex financial concepts and makes them accessible to young readers. Through relatable stories and practical advice, it empowers kids to understand the value of money and build essential skills for budgeting, saving, and smart spending. Consider setting aside time for family reading sessions where you discuss the lessons learned from the books, reinforcing the importance of financial literacy.

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Financial education is an important lesson that all children should be taught from a young age. These tips should help parents to feel more confident broaching the topic with their young ones and help to grow their financial literacy knowledge.