By Alistair McQueen
With one-third of UK households now home to children under the age of 16 1, about seven million families are doing their best to act as ‘home schools’ or in lockdown. We've broken down our money lessons into age-appropriate categories.
Money activities for pre-schoolers
At this young age, getting used to money through play is a great way to begin.
Young children have seen real money in all its shapes and sizes, so ask them to design their own coins and notes. Whose head will be on their money? What colour will each coin or note be?
There are eight different sterling coins in circulation and each one is from a specific year. It can be fun to collect these different coins for different years. Perhaps add a game, seeing who is the first to reach 10 coins from the same year.
Counting with money
Learning to count comes in handy when managing money. Collect a big bundle of coins and find a dice. Each player rolls the dice, and piles that number of coins on top of each other. The winner is the one who builds the tallest tower without it falling over!
Playing at shopping
Many kids love to play at shopping. This means setting up the imaginary shop, deciding what it'll sell, making its sign, setting prices, serving customers and not forgetting to close the shop at the end of the day.
The history of ‘piggy banks’ is uncertain, but some suggest they date back more than 600 years to a time when pots were made from a cheap clay that was called ‘pygg’, and the rest may be history 2. Regardless, piggy banks are a great way to introduce children to the concept of saving. They could even make their own piggy bank – from a jar, box, or even from paper mache and a balloon.
Money activities for children aged 5-12
At this age, you can start introducing more responsibility for money.
Earning pocket money
This may be the first money that a child earns in their life. It could be earned for good behaviour, cleaning their bedroom or for helping around the house. With a bit of thought, a reward and penalty system could be introduced, offering more money for good actions, and less money for bad.
Some of this money can be saved – in their piggy bank or real bank – and some can be spent. But when it’s gone, it’s gone. We all need to learn that none of us has access to a bottomless pit of money.
Opening a real bank account
You could help your child open a real current or savings account. This allows you to introduce the concept of interest on money saved – something that a piggy bank will not offer. A bank account can typically be opened for free from age 11, with the help of a parent or guardian. A child’s bank account is pretty much like an adult’s, but without the option of an overdraft.
Using the ‘24-hour-rule’
A simple technique can be to introduce the ‘24-hour-rule’. If your child finds something on the internet that they'd like to buy, tell them that they must wait 24 hours before purchasing. Often, their minds will move on to something else which helps them understand what every purchase isn't as important as they might think.
Introducing saving incentives
The government spends billions of pounds every year encouraging adults to save for their retirement – in the form of pensions tax relief. If adults need this incentive, why should children be any different? This incentive could be in the form of matching. For example, for every £10 they save, you could add another £5 or £10. If they're trying to save £20 for a new computer game, your ‘matching’ scheme makes their goal feel a lot more achievable.
Money activities for children aged 12 and over
Older children can be introduced to similar money responsibilities as adults.
Investing in fantasy shares
Fantasy football carries a degree of financial management, with players being challenged to buy and sell the best footballers (within a budget) to score maximum points. This fantasy shares game works in the same way. With a fictional gift of £1,000, your child could be encouraged to invest in a range of 10 different FTSE 100 companies.
First, they should do some research about the activities and plans of each company. They can then make their investments. Every day they can monitor the movement in the value of their shares. You can play too, and winner is the first one to add +20% to the value of their investments.
Shopping around for the best bank account
Having set up a bank account when in primary school, your child may now be better equipped to shop around for a new account, perhaps offering a better deal – such as a better interest rate, better offers, or better online tools. Even in adulthood, many of us are poor at shopping around for better banking deals, so it’s good to establish this habit at a young age.
The four key steps to switching are:
- Identify the new bank account
- Apply for this new bank account
- Tell the new bank that you want to complete a current account switch agreement, and they should then provide the necessary paperwork
- Send this completed paperwork to the new bank, with a note of the desired switching date. (As a parent or guardian, you will probably need to help them with the paperwork.)
Widely regarded as the greatest board game of capitalism, competition and business strategy, more than 250m Monopoly games have been sold since 1903 3. The value of money can be learnt while travelling around the board. And don’t forget to collect £200 when you pass Go.
Watching money movies
Most teens love movies, and there are some great money movies that bring the whole subject to life. Here are a few of our favourites:
- Wall Street (rating 15): 1980s classic about stock broking in New York, including the debatable line “greed is good”.
- Brewster’s Millions (rating 15): Comedy that challenges protagonist ‘Brewster’ to spend $30m in 30 days, if he is to inherit $300m from his great uncle.
- The Italian Job (rating PG): Michael Caine leads his crazy gang as they attempt to steal gold from Italy.
- Jerry Maguire (rating 15): “Show me the money”, as Tom Cruise struggles to be a sports agent with his one and only client.
- The Money Pit (rating 12): A young couple decide to pour all their money into a dilapidated house. Challenge and adventure follow.