With the summer holidays fast-approaching, parents everywhere are wondering how to keep their little angels occupied for six weeks without it costing a fortune. So, what if you could not only entertain them for free, but also teach your child a thing or two about money and give them a head-start with their own financial futures? With a host of games and apps available to lend a hand, they won’t even realise they’re learning. Here’s a few ideas to get you started…
1. Show them that money doesn’t grow on trees
When kids see cash popping out of the wall and parents paying for shopping with the wave of a seemingly magic plastic card, it’s no wonder they think money is an unlimited resource. You could start by simply explaining the basics, like where money comes from and how it gets to the bank, perhaps using toys, or LEGO® to make it fun. LEGO is just one of the companies we 've written about in our 'Companies that do good' feature. You could also look at apps like PiggyBot as they use play to teach younger kids how to plan their spending and saving, and to pick savings goals and stick to them. If your kids are older, why not simply make a list of your own household income and outgoings to show them where all the money goes and how much everything, like heating, electricity and food really costs.
2. Teach them money management
One of the most effective ways to teach kids about managing money is to put the responsibility in their hands. Give them a week’s allowance, including the cost of any activities they do regularly, lunch money, and a bit extra for pocket money, and agree a spending plan with them. This should help them understand that blowing their entire budget on the latest Avengers toy means they can’t afford something else they want – an important lesson akin to the ones we grapple with as adults every month. The Aardman-designed Pigby’s Fair app uses an animated fairground adventure to help 4-6 year olds appreciate the ‘spend or save’ dilemma. Older kids might enjoy a board game like Payday, which encourages good planning, budgeting and saving habits, and even rewards players for having an emergency fund and long-term investing habits. At the very least it’ll get them off the iPad for an hour
3. Give them money confidence
Kids love pretending to be adults and thanks to smart apps like Gohenry, 6-18 year olds can experience the excitement, kudos and freedom of owning their very own debit-style contactless card to make purchases online and in shops, or withdraw cash from ATMs. It’s a pre-paid card with a host of parental controls, so there’s no danger of expensive mistakes. Adults can set up regular, or make one-off, payments, block the card if it goes missing and even get notifications every time it’s used, all via an app. Kids get to customise their card and earn extra credit by completing tasks, like chores. The grown-up feeling they’ll get with their very own card should teach them to act and think responsibly about their spending by the time they leave for university!
4. Teach them that saving is cool!
With credit so cheap and widely available, we sometimes forget the sense of achievement you feel when you’ve saved hard for something you want. Imparting that saving discipline on your children can be a rewarding experience for everyone. So, next time they say ‘ I want that,’ sit them down and agree to a saving plan, working out how much of their pocket money they need to save, and for how long, to reach it. Completed chores and good behaviour could earn them extra cash to boost their savings plan and reach their goal quicker. When they’ve saved enough, make an occasion of going to the shop and let them pay the cashier. They’ll remember the feeling of accomplishment they got, and with any luck, they’ll have caught the savings bug for life.
5. Introduce them to investing
It’s never early or too late to learn something new, so why not teach the kids (and maybe yourself) a little bit about investing? The earlier you start investing the more chance your money gets to grow, so teaching the kids about it now will give them an advantage later when they’re old enough to invest for themselves. Discussing the advantages (better potential returns than from cash savings and the power of compound interest) and the disadvantages (risk and fees), will help them to make an informed choice about whether it’s for them. You could even get them started early on their own investment journey. Some new online investment services will now build an investment portfolio for as little as £1 and give you 24/7 access to check your performance and manage your plan. Why not start an investment Plan or Junior ISA on behalf of each child and let them name it themselves? Checking back periodically to see how their investments change and how they perform, should prove to be both fun and educational. What’s more, if they top it up regularly with birthday, Christmas or pocket money, by the time they reach university age, they should have a decent sum to help them along their way. Even more valuable, though, will be their good savings habits and an appreciation of the power of long-term investing.
Please remember that investments can go down in value, and you could get back less than invested.
Investing is for everyone.
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The comments and opinions expressed in this article are the author's own and should not be taken as financial advice from Wealthify.