Teaching children about money is an important part of your child’s development. Helping them to learn the skills they need to be able to handle money is important in order for them to avoid the likes of debt and other financial implications. But with few practical financial skills being taught at schools, it is where us parents need to take on the role of teaching our children vital money lessons such has how to save and how to budget.
Research has shown that how children handle money is learnt from their parents and helping them to understand how to manage finances from an early age will help them deal with their money better in years to come. Finding ways to teach your children about money from a young age can help give them the knowledge to handle their money to make it go further.
But how do you teach children these important financial lessons? Shepherds Friendly has created a guide for parents on how to teach children about money. It is split into different age groups to ensure you are not trying to teach something too ambitious to soon.
One section the guide mentions is the importance of savings. It is vital that parents help children to understand that if there is something the child wants but they can’t currently afford it, then they are going to have to save for it before they can but it.
An example of a child’s savings plan is a Shepherds Friendly Junior ISA, which when saving into it falls under the ‘tax umbrella’. This means that any growth that your child’s money receives in this plan will be free from income tax and capital gains tax. It also means when they take the money upon maturity of the plan it will be completely tax free, which of course, helps their savings to go further. When opening a Junior ISA you could explain to the child what could happen to the savings over time during the plan term.
There are many other ways you can talk to children about money which are mentioned in the infographic below: