12 lessons about money before the age of 12

Money is a fact of life, we all need it, and we all need to know how to manage it smartly so the earlier we start learning this the better.

The importance of managing money or saving is not taught in schools and many of us find that as adults, we have to fend for ourselves. We can make sure the next generation gets a better start by teaching children the importance of understanding money from a young age.

  1. Money doesn’t grow on trees

It seems obvious to us but when children see you withdrawing cash from an ATM, or handing over a credit or debit card, they will not realise that it isn’t a finite resource.

You need to explain to them that you work to make money and that the bank is just a place that keeps it safe and looks after it for you.

  1. Work in return for pocket money

Even young children can help around the house and do a few chores and it is never too early to get them to tidy their toys, put away their clothes or to help out with pets. Starting early means these life skills are more likely to become a good habit that can be maintained.

As they get a little older you can even give them a weekly list of tasks that must be completed to receive their pocket money.

  1. Live within your budget

The best way to teach children to start managing money is to give them some. If they blow all of it on one toy and don’t have enough left for some sweets then that is not a bad thing. It means that they learn first-hand the consequences of overspending and are less likely to do it again.

  1. Good things come to those who wait

Teaching children about delayed gratification will help combat the ‘buy now, pay later’ mentality that causes so many problems for adults in life. As much as you can, reinforce the idea that waiting pays off.

You could ask them to save up for something that they really want and as they show patience and reach the desired amount, give them a small reward or treat.

  1. Don’t spend it as soon as you get It

Curbing those impulse purchases goes hand in hand with teaching delayed gratification. Teaching by example is always a good idea.  Before you go shopping, create a budget. Outline what you are going to buy, what stores you’re going to, and the price range for each item. Many stores have information and prices on-line so a computer loving child can do the research that way and work out the best offers.

It may take a little longer to start with but your children will learn that a little planning ahead of time leads to saving money and is a good routine.

  1. Saving can be cool

Your son or daughter want that new Lego set but doesn’t have enough money? Tell them to save up. Once they have enough, take them shopping and let them pay the cashier by themselves. He or she will never forget how good it feels to work toward a goal and be rewarded in the end.

  1. Keep track of it

Simply knowing where their money is going is a big step forward in your child’s money management skills. Get them to use a notebook or a simple spreadsheet to keep a note of what they receive and what they spend. Go and buy a nice folder together that they can use to store receipts.

  1. Have a wish list

Children can find it hard to plan ahead and set priorities so take a little time to sit down together and make a wish list of the things your child wants to do with their money. Then you can talk about what is important about each item and help them put them in order.

  1. Get a money box and/or open a bank account

Actual cash means more to a child than a bank account so start by getting a money box in which they can keep their pocket money and any cash that is gifted to them.

A small wallet or purse of their own will make them feel grown up and responsible.

  1. A little scepticism can be a good thing

While you don’t want your children to think companies are out take advantage of them, it is useful to point out sales tricks every now and them. A little healthy scepticism is crucial so they don’t fall for every glib line and believe, for example, that the way to be popular or successful is to buy the right clothes or toys.

  1. Sharing

Suggest that your children give a little of their money to charity, a good cause, or to others. This teaches them that money can be used to help people, rather than just for buying things. Remind them that it’s not how much you give, or about making a big issue of it, but that doing good things for others, no matter what is it, really counts.

  1. Lead by example

Children learn by example, so the best way to teach your child about saving money is to show that you are also saving.  Have your own jar of money that you put cash in regularly.

When you’re out shopping, show your children how to differentiate between products and prices and explain why buying one item makes better sense than another.


This article that I wrote a while ago about teenagers and money  is for your older children. 10 things teenagers need to know about money

Here is the link to the podcast of the show on Dubai Eye where we discussed this topic: Dubai Eye podcast 05.06.17 Teaching children about money

If you would like advice on any aspect of personal financial planning, please contact me at keren@holbornassets.com

About FinancialUAE

A qualified and experienced Independent Financial Adviser based in Dubai, UAE. Professional and ethical. Freelance writer on personal financial issues & the On Your Side column in The National. Founder of Facebook group British Expats Dubai. Senior Partner at Holborn Assets LLC, Dubai, UAE.
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