Recently we opened a children’s bank account for my daughter, who has just turned eight. It’s one I technically control but which we’ve put her in charge of. She’ll decide what to put in and what to take out. There isn’t a bank card attached so I still have to press the button, meaning it’s pretty risk free, but it’s part of my master plan to get her to understand what money and how to manage it…something I didn’t quite get till my late 20’s and after more than one mistake with bank loans, overdrafts and credit cards.
We started off as everyone does I think with a Piggy Bank, and just the idea of money, what it is, how much you have and why you should save it up. Each week, from when she was really small, we would give her a pound to put in the bank and any extra money would go in there too. Once it was full, we would empty it, count it and she could go to the toy store to spend her ‘hard earned’ savings.
Then, when she was four, we moved onto Pocket Money. According to Netmums, pocket money averages £6.55 per week and my daughter’s falls just under that. It’s a fair bit of money for a child who still struggles to tie her own shoes, I know, and I didn’t want it to just be a case of giving her money and then having her immediately run to the shop and spend it on sweets. So, we had her split it 50/50. 50% goes in her purse and she can spend it on whatever she wants. 50% has to go in her piggy bank, which – when full – goes into her savings account – which means a trip to the bank every few months (at least as long as the high-street bank still exists!). At first, it was a bit of a thrill for her to just get money, which got spent straight away on magazines and sweets.
Then, she started to want to buy bigger, better, and more expensive items. She couldn’t quite understand why her weekly £3 wasn’t cutting it so we introduced the idea of a Money Tree. My daughter picks something she wants to buy, we take a picture and then sit and figure out how much money she needs and how many weeks it will take her to save up enough to afford whatever it is. Next, we draw a tree with a leaf for every pound she needs.
When she gets her pocket money, I still make her split it 50/50 but out the 50 that goes in her purse she can give me some or all of it to go towards her big purchase. Once she’s decided, she colours in a leaf for every pound she hands over. Some weeks, it’s all of it, some weeks it’s nothing. Once all the leaves are coloured in, she can make her dream purchase. I love the money tree because it means she can see her savings grow and understood how much further she has to go. It makes money real and it makes saving fun.
And, while all this saving and spending is going on, we try and talk to about money. I sit down and balance the cheque book every Saturday morning. I explain what I’m doing and why, where the money comes in (as both my husband and I are freelance I can link it to jobs we’ve done) and where it goes. I don’t go into too much detail but it’s to help her understand that money doesn’t just appear from nowhere and you have to keep an eye on what you spend so you can then afford nice things.
Next on the list is earning her own money. She’s nowhere near old enough for a Saturday job but, come the summer, we are introducing the idea of chores that we will pay her to do. Gradually, it will replace the pocket money and, hopefully, give her more of a sense of responsibility. It will probably also give her a bit of a shock to the system but I don’t think that is all bad, even though a few of my friends have said she’s too young.
What do you think? I am asking too much at too young an age? What do you do to help your kids learn about money?