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Would you take £500 today or £1,000 at the end of the year?
The way you answered that question could say a lot about your money habits. It shows your assessment of risk, inflation, and investment returns. The right answer for almost everyone is £1,000 after a year, yet only half of the people who take this quiz will wait rather than grab the money right away.
A major survey by the Money Advice Service (MAS) found that millions of Britons were financially illiterate. Most didn’t understand inflation, or the way their taxes were calculated, the effects of a weakening pound, or even the current rate of interest they were earning on their savings account.
This means there’s a growing need to teach children across the country basic financial concepts. Here are ten ways you can teach your kids about money without being a boring accountant:
Saving money in a clear jars is a lot more fun. Children are more likely to save if they can see their wealth collect in a clear jar over time.
The best way to teach your kids about finance is to show them how you handle yours. You need to set a good example by showing them how you make important spending decisions and how long you spend deliberating cuts and cost savings.
Kids have a hard time judging the value of things. You need to show them the relative costs of everything they come across. Explain to them how an empty basket can cost as much as an ice-cream. Put small expenses into perspective whenever you get the chance.
Paying kids to do chores, taking out the trash, and buying groceries is a lot better than simply giving them money to breathe. Not only does it link money with hard work, but it also encourages them to be more careful with their spending.
A lot of banks offer savings accounts specifically tailored for children. Having control of a bank account with a little bit of money can be a great way for your kids to learn financial management at a young age.
A simple job moving the neighbour’s lawn or washing cars could be the best financial training for your kids.
Explain compound interest and show them how it can work for them if they save and against them if they borrow. Learning about debt before they turn 18 is crucial if you want them to avoid credit card rsalesmen.
Every financial choice has an opportunity cost. Show them the consequences of buying something today, rather than waiting for something better tomorrow. Or simply tell them they can’t have new shoes because they spent their money on the video game.
Teaching your kids how about money is crucial. Most British schools don’t cover this topic adequately, so you can use these eight techniques to prepare your child for the economic realities they will face later.