It’s very likely that your children and teens received a bit of money from relatives this Christmas. As the press have covered a lot in recent weeks, this has been identified as a valuable way for children and teens to learn some vital lessons in money management. Giving young people control of a larger amount of money can be a good way of handing over responsibility and giving them hands on experience of managing their own money. A vital lesson for all.
So, why not take the opportunity this January to help your children learn a little bit more about responsible money management? Here are a few lessons that are a good place to start and will ensure your Christmas gift doesn’t go straight down the drain:
1. Let them make their own choices (or even mistakes)
As hard as it can be to see your children making their own money choices, that you are certain will end in tears, letting them spend the money how they see fit is the biggest lesson they can take from spending their Christmas money. Try to take a step back, offering guidance and advice rather than telling them what they can and can’t spend their money on. At the end of the day, we always learn a lot from our own mistakes, so you’ve got to let them happen.
2. The 10% rule - putting a little bit away for a rainy day
Get your children and teens to take stock of their Christmas money so they know exactly how much they have, and then encourage them to set savings goals for the things they want and need before just spending it. This will help them budget. If it’s not going to be too painful for them, recommend they at least put away about 10% somewhere safe.. Starting this habit with things like their allowance and Christmas money, will help them enormously to manage their money as they grow up. 10% has worked well for us (and other parents we’ve spoken to) because it is small enough so as not to take away the fun of having Christmas money in the first place! But really, saving towards something before you spend is a good start!
3. Gifts for the next year, not just for January…
Though it is important that purchases are the choice of the children themselves, getting them thinking about the difference of an instantly gratifying, ‘short term benefit’ purchase in comparison to purchases that will last is a really great idea. For instance, blowing all their cash on party clothes that they’ll like for the next few months, then go off, might not be as useful and ‘gratifying’ as a coat that will do them for the next year.