Most people have strong feelings and opinions about money. Everyone needs to understand where it comes from, how to spend it wisely, and how to save and invest for the future. Whatever the values and beliefs families place on handling money, financial experts agree that it is never too early for parents to begin educating their children about their financial future.
Phil Neilson, chief executive at The Henley Group, believes that the more children learn about money, the more they will be able to make wise financial decisions as they grow.
As a father of four children aged between 10 and 17, Mr Neilson suggests that as soon as a child learns to count, they can begin to learn about dealing with money.
'By the time a child reaches five or six, he or she should be responsible enough to understand simple concepts about money, such as the different ways they can spend their pocket money,' Mr Neilson says.
Speak in their language
When teaching children about money, he says parents should make an effort to think in children's terms, not adult terms. For instance, a young child may ask parents how much money they make, but what they really want to know is not how much parents earn, but why they are unable to buy a certain toy or attend certain events. It is important for parents to use examples or activities that match the child's stage of development, not necessarily the child's actual age. On the topic of allowances or pocket money, Mr Neilson says there is no right or wrong way to provide children with money, and because each family is in a unique financial situation, deciding whether or not to give an allowance is a family decision. The important issue is to ensure that children, regardless of their age, have an appreciation of money and the things they can do with it.