MILLIONS of families are tightening their belts in an effort to cope with the cost of living crisis – but have you thought how to explain it to the kids?
Some desperate parents have even been forced to choose between heating and eating.
Talking about money is tough at the best of times, but doing so during difficult periods and with children is even more challenging.
We spoke to money expert Louise Hill, the boss of pocket money app Go Henry and mum to a 21-year-old son, about how you can approach the sensitive subject with your kids.
She said: “Parents should always speak openly about money around the home and use any excuse to do that.
“At the moment, we’re all bracing ourselves for price rises and possibly the sharpest annual cost of living rise since the 1980s.
“So that really brings money into focus and how important it is to talk to kids about the importance of saving money and spending responsibly.”
It’s the perfect time for parents to have these kind of discussions with their children – but in an age appropriate way. Here’s how:
Get the kids involved
“It might be as simple as explaining why the family is cutting back on certain things and what the kids consider ‘essentials’ may no longer be around,” said Louise.
“It could involve talking to kids about earning money, like suggesting that they help with tasks that might positively impact household bills.”
This could be making sure to turn off lights, keep doors closed to avoid draughts or turning the tap off when they brush their teeth -all things that could help cut your energy bill.
“If there’s just one thing that you can do for your kids I’d say it’s giving them pocket money, even if it’s just 20p,” she said.
“It really doesn’t matter how much, but if you can give them some pocket money in any way shape or form, whatever you can afford, that they can control, and they can make decisions over, that’s the biggest empowerment you can give your kids.
“It lets the make decisions, it lets them make mistakes, and they will learn.”
And not only will it help them better understand what’s going on now, but in the future too.
According to the government’s MoneyHelper website, children whose parents talk to them about money and give them responsibility for spending and saving at a young age are better at managing their finances in adult life.
One dad has helped his four kids save pocket money – to buy their first house in years to come. And a single mum gives her 7-year-old chores to earn 50p pocket money, saying she doesn’t have time to do everything herself.
Incorporating money “lessons” into everyday life could be easier than you think.
Louise said: “If you’re taking kids to the shops, especially younger ones, use it as an opportunity to talk about wants and needs.
“We need the rice and the chicken but we don’t need – we just want – the chocolate cake, for example.”
“There are lots of simple ways to do that and bring that to life for children so that it’s meaningful, without having to go into complicated details or worrying them”.
Another approach could be asking youngsters to choose between a brand an own-brand version.
“Downshifting” from a brand to a supermarket own label could save you as much as 30% off food bills, according to Martin Lewis.
By getting your kids involved, you’re not only saving money now, you’re teaching them a valuable lesson for the future about spending money,
“With younger kids you can really turn that into a game, like finding the cheapest version of the product,” she says.
Put a positive spin on things
Parents can also put a positive spin on changes to spending, Louise says, for instance ditching takeaways.
“If the family is used to having a takeaway pizza, you can turn that into having fun making them at home instead.
“Involve them in making it – choosing the toppings and shopping for the ingredients.”
Or if you have a dog walker, you could get your teenager to walk the pooch instead to help save money and give them a sense of responsibility.
“It’s about involving them in a way that’s not threatening, not frightening and letting then see that they can actually make a difference in these kind of decisions that affect the family,” she says.
You can find more fund ways to teach kids about money a every age on the MoneyHelper website.
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