Hey Small Spender! Teaching Children Financial Responsibility

Pocket money can be a great way to teach your children about financial responsibility.

To start with, it’s helpful to illustrate that pocket money is something which is earned, rather than a handout.

But that’s just the start of the learning journey.

Dr David Anderson of the Child Mind Institute says one of the hardest parts of teaching children about money is letting them make mistakes.

Kids may take some time to work out how to save and spend money responsibly.

Experts suggest making money tangible, especially for younger children. It helps to look at cash, talk about its value, how it is earned, and how good it feels to save.

One idea many experts support is having ‘jars’ for spending, saving, and sharing (or giving). Again, it helps to have a physical jar to see the money going into, and to help think about putting money towards more than just a new toy.

Spending and saving are self-explanatory, the sharing jar less so: surprisingly, it can end up being their favourite jar - especially if they have personal interest in where it goes. It might be a charity they care about like the SPCA. Another idea is having them buy a small gift when it’s a friend’s birthday.

How to divide a child’s money up between the three jars is up to you but they need to know the amounts are set so as to underline that not all money goes in one place.

Regular chats about what they choose to save for, and an assessment of what they have spent their money on, is helpful. Asking open questions such as ‘What’s your favourite thing you bought yourself?’ or ‘What was the most expensive thing you spent money on?’ and then ‘Was it worth it?’ and ‘Would you buy that again?’ is a good way of starting these chats.