Debt can be stressful. This is why the vital ability to manage money is something that most parents strive to instill in their children. Allowances, housework, and piggy banks are proven techniques, but in the digital age there are apps and online services available to us to impart financial wisdom and encourage good habits. This is important because cash is decreasing, especially during the pandemic.
It may seem instinctive to protect children from the pressures of financial management, but it can be a disservice. UK research from the University of Cambridge suggests that the financial habits that children will adopt in adulthood can be fixed at the age of 7 years.
But where do you start? And with what? Mary Gresham, an Atlanta-based psychologist specializing in finance and family, says she should start as soon as children are aware of the concept of money, usually around the age of 4 and 5.
A good financial life is one of the most important factors for well-being throughout life, according to Gresham, which is why she says parents should see financial education as as important as education. academic.
“Give an allowance, then have your kids divide the money into four categories: spend, save, give and invest,” says Gresham.
This is a popular approach in the United States, promoted by groups like Money saving, which even offers a physical piggy bank with the same four categories.
Discussing family finances and allowing children to express their opinions on how the money is spent can be beneficial, says Gresham. In order for money lessons to really integrate, children need to have some control and participate in decisions. Family finances should be openly discussed, and children should be allowed to choose how to spend their own money, even if it means buying something that you consider wasteful.
“A month later, ask your child if they’re glad they bought it,” Gresham says. “Was it good value for money? Did it hit its mark?”
It helps them think through and learn what is worth buying and what is not.
For the past few months, my family has been using GridMoney. The app allows me to set a regular allowance for my children (ages 11 and 8), make a to-do list to give them the opportunity to earn a little more, create savings goals and make donations to charities.
The money is divided into different pots, and we match the money they choose to put in their savings pot to encourage them to save. All of this information is clearly presented in an app that we can all access, even if the parents remain in control.
“We are using technology to make it easier for parents to manage an allowance and stay on top of household chores,” said Will Carmichael, CEO of RoosterMoney. “It helps parents know how much they’ve given their children over time and what they’ve spent it on.”
My 11 year old son has a debit card linked to his RoosterMoney account, which he can use while on the go or for shopping online. I get alerts when it’s spending (debit card support is limited in the UK at this time). We still manage my 8 year old daughter’s purchases, but RoosterMoney gives her a running total of what she needs to spend. For very young children, there is an option to award stars, which can then turn into money later.