Talking about money as a family

A recent survey: July 2004: found that 7-11 year olds receive £3-4 on average, and 12-16 year olds £4-5.

However, many of these children have to do chores for the money like helping with the washing up or vacuuming.

Decide what you can afford as a family and what you feel is appropriate for your children. Some families base the amount on the age of the child - 50p for a 5 year old, 60p for 6 year old etc. It is your choice based on family finances and what you are expecting your children to spend the money on. The more you expect them to buy, the more you will need to give them.

Remember to be clear about what you expect them to purchase - they may choose not to - but you will no longer buy those things for them.

Also be clear about when they can expect a rise - birthdays are a good idea with the money increasing annually. Keep a record of what you agree for the oldest child and match this for siblings. If you need to start at a higher rate because of the cost of goods, then raise older children's pocket money by the same amount at the same time.

Start at an early age
It is never too early to introduce the language of money. This is all part of developing children's language and giving them as wide an experience as possible.

Talk about coins and money. Show them the pictures on the coins and let them handle the coins. Play shopping games with them. Let them set the prices and create a simple shop using a cardboard box for a till. Initially just hand over money and collect the goods. Later on encourage them to create a price list.

Talk about some of the decisions you make when you are out shopping. If you choose one brand over another explain why. Ask for their opinion - but overrule this if you want something else.

As they get older include them in the shopping. Ask them to look for certain items - the things they most want. If they don't spot them or remember, don't buy them!

Discuss the shopping list with them - allow them to chose some of your purchases e.g. cereal, biscuits. But talk about their choices - if the cereal has too much sugar; is too expensive; you don't think they will like it. Once they have made their choice they have to finish the packet.

Use the language of shops when talking to them: shopping trolley; till; pay; cash; credit card; aisle; value; price; cost; expensive; cheap; packet; cash back; receipt; etc.

Play money games with your children. Let them handle real coins - sit with them and talk about the colours/shapes and pictures.

'I'm thinking of a coin. It is silver. It has a round shape and is small. What am I thinking of?'

I have 2 coins in my hand and if I add them together they make 10p. What coins have I got?'

'How many different ways can you make 5p?'

How many things can you buy for 50p in the sweet shop?'

Explain what a credit card is for - you will know what concepts your children can understand.

Think of how it may look to young children: you go into the supermarket, fill your trolley, hand over a piece of plastic which is put through the till, and then you get cash back! You can also get cash by going to the bank machine! Tell them where the money comes from.

Discuss large family purchases
When planning a holiday or thinking about buying a new car, talk about some of the decisions you are going to make. Let children know that money needs to be thought of:

• Is the car fuel efficient?
• Will it suit the family in terms of size?
• Does the holiday offer free places for children?
• Is a self-catering apartment better than the hotel package?

Older children can be encouraged to take a more active role by asking them to do some of the research. Give them the holiday brochures and ask them to go through and mark those places they would like to visit. Ask them to see if they can find a cheaper package on the Internet.

With purchases like this children will need to understand that you will have the final decision. Make sure you take their views into consideration and explain why you are rejecting their ideas. Encourage them to present you with more than one suggestion, with reasons for and against each option. This teaches them to look closely at what is on offer.

Not all children will want to take part in activities like this. Don't force them to do this - give them the option as part of their input. If they see their opinions are valued and treat the exercise as part of family life, they may well be more willing.

Avoid negative criticism of any choices they make without being able to give equal weight to some positives. Try to start with positive comments while avoiding the 'but….'

Encourage good money habits
Family values and attitudes are a part of this - and each family is different.

You will also have your own views on what are good money habits. These will have been shaped by your own family and by your life experiences.

Things you may want to consider include:

• The value of money. The messages you give on your attitude to money will influence this - how you spend, save, give, etc.
• How you talk about money.
• The interest you take in how they manage their money.
• How you support them when they are trying to save for a larger item.
• Whether or not you give money as a reward.
• The value you place on some jobs around the house.
• The interest you take in what they have bought, without avoiding being negative when necessary. Be honest about your thoughts on some of their purchases - but support them.
• Let them make mistakes and find out from their own experience.

Set clear guidelines
It is important to set clear guidelines about money children have so that decisions/arguments about money are based on fact.

• What the money is to be used for
• What parents will continue to provide
• What parents will no longer buy
• What happens to money given as gifts
• What happens to money that is earned
• What happens in unexpected situations

Children need to know that these guidelines will be reviewed on a regular basis and that their views will be taken into consideration.

Try to avoid shouting matches over money. Arguments that are more like discussions on the pros and cons are more likely to end in agreement. Model this in the way you approach the discussion. Prepare you facts and help your children prepare their information - even if you don't agree with this. Young children need to be taught how to negotiate and present their case.

It is worth having the guidelines written down so everyone can refer to them. This is another way of ensuring that disputes are based on fact. Make sure that, as an adult, you stick to the guidelines.

Regular amount or when you can

Each family is different and you will have clear ideas on whether you want to give a regular amount of pocket money or not.

A regular amount each week/month allows children to plan their spending and to have an idea of how they can save up for larger items.

If giving when you can then try and associate this with special occasions where money might be needed like school trips, holidays, parties, family birthdays etc. Financial difficulties
There can be a fine line between sharing everything with your children and worrying them unduly. However, children will often pick up the feeling that something is not right.

Money issues cause the most relationship breakdowns. It is also a subject people avoid talking about. Debt is an area where it is particularly important to share as soon as possible.

It is important to share with children that the money situation has changed without necessarily going into detail that would worry them. If they understand that the money they get depends on the family budget then you can explain why you need to cut back on certain expenses or lower their pocket money.

Talk about money when shopping
Use the vocabulary of money when out shopping. Let children see why you are choosing one item over another. It may be the brand you like, the value for money, the quality of the goods, what you need, what it does etc.

Share tips you have for getting value for money: checking the weight against price, special offers and tokens, savings that the shop are using like 2 for the price of 1 - all the time teaching them that though these might appear to be savings offers need to be checked to ensure you are getting a good deal.

Encourage older children to keep a record of their spending and saving

Make this a fun thing you do together at first - or something that you check each month.

Show them a bank statement and explain how you check off your spending to make sure the bank has not made any mistakes.

Give them interest for keeping the record up-to-date.

Beginning to keep a record encourages children to develop good habits for the future.

Another way to keep a record is to put all receipts into envelopes - one for each month of the year. They can also keep notes on what they have done with their money. This encourages children to keep their receipts.

When you review spending over the year and look at increasing their pocket money you can ask them to comment on their purchases. You may wish to comment on their spending as well - remembering to include positives as well as negatives.

Suggest ways they can increase their finances.
Initially you may want to give them money for doing jobs around the house. Some families encourage this from the start as a means of earning pocket money.

As they get older find more jobs for them to do - while expecting them to continue doing others for free. This is all part of being in a family and sharing the workload.

Family and friends might also agree to pay for odd jobs. Agree a rate so that they get paid the same as they would do at home: otherwise they will prefer to do jobs for your friends!

Keep a record of the price agreed for the various jobs, and look at this on a regular basis to make sure the rates are reasonable.

Once they are old enough to start a paper round, Saturday job etc, then support them by helping them with looking for the job, getting to and from work, and encouraging them. As they begin to take on these responsibilities they can be the one to make sure they get there on time, notify their boss when they are going on holiday and if they are late.

Money earned for doing chores should be theirs to spend how they wish. However, you will have thoughts as a family on things you do not want them to buy. This will need to be part of a general discussion about money and spending habits.

Encourage giving from an early age

Why give money to anyone? One of the many values we teach in society is to help others. This starts within the family as we learn to share. There are many ways of giving: time, money, jobs, taking part in sponsored events etc.

To encourage giving money use a separate piggy bank or jar labeled giving. Encourage children to put some of their money aside each week: 10p in every £1 is the amount often suggested, but you can discuss this with your children.

Discuss with your child/ren how they want to spend their 'giving' money. They might want to use it for sponsoring friends, for giving to a charity or church, for appeals on the TV, for special gifts for people (in hospital or in an orphanage abroad etc.).

Alongside this discuss other ways in which they can give of their time and energy.

Check out the accounts
When looking for savings accounts for your children check out a range of these. Don't automatically go for your own bank as there may be a better offer elsewhere.

Check on the interest rate, how long the money has to stay in the account, and any other conditions.

With older children suggest they look at these accounts themselves and find the best option. This encourages them to begin to read the small print.

When looking for a credit card for your teenagers, again check the small print. Credit cards vary in interest rates and the length of time before payments kick in.

Make sure your child/ren are aware of the interest rate on their credit card and what it will mean to them if they don't pay off their bill every month. Draw up a chart which shows how much they could end up owing. They need to understand that they may end up paying interest on the whole amount even if they pay off some of the bill.

Don't be frightened about decreasing the amount.

It is important to be realistic about the money situation at home. There are many reasons for a change in circumstances and it is important that children realise this may have an impact on their pocket money. At the same time it is important not to worry them unduly about what is going to happen to the family. Be sensitive to them as individuals.

If you do need to decrease the amount of pocket money make sure you reinstate this as soon as you are able.

Money is the least talked about topic in many families and yet it causes the most relationship breakdowns. Address any money issues as early as possible. Managing your finances as a couple gives you control of your spending and allows you both to make joint decisions on purchases.

If, at any time, you feel you are getting into debt it is important to talk to someone and sort it out as soon as possible. The longer it is left the more likely it is to grow.

Visit the pocket money section.