Teaching your Child to stay out of Debt

It's never too early to teach your children about the importance of money. Teaching them to manage their money well at an early age could help them to start making sensible decisions early on - and get them into good financial habits further down the line. Earlier this year, the All Party Parliamentary Group (APPG) on Financial Education for Young People launched its 'Financial Education and the Curriculum' campaign - promoting compulsory teaching about money in UK schools.

Given the current economic climate, with rising living costs increasing the likelihood of people ending up in debt, it's more important than ever to teach your child the best ways of keeping in control of their money and making good financial decisions. If you're looking for advice on dealing with debt, the Debt Advisory Centre could be a good starting point.

Here are some practical ways to help your child stay out of debt in later life.

The importance of saving

One effective means of staying debt-free - and increasing your financial security - is to have a savings pot. Whether you're saving for a big expense or simply setting money aside for any unexpected costs (such as if you need to repair your car or cover the cost of vet's bills), savings could offer a dependable lifeline.

From the humble piggy bank when they're little more than toddlers to savings accounts once they're a bit older, teaching your child about saving should help them to build a solid financial foundation for the future.

Teach them the value of letting money grow over time, and if they want that brand-new pair of trainers or games console, encourage them to save up for it - so they can appreciate getting something they've really earned.

Teach the difference between 'wants' and 'needs'

Any parent will be familiar with the phrase 'I want!' - all too often accompanied by stamping feet and a tantrum! However, it's important to teach your kids the difference between things they want (whether it's a toy or packet of sweets) and things they really need (stationery, a new pair of school shoes, etc.).

Of course, this doesn't mean your child can't have a treat from time to time, but it's important to teach them the value of money and what it can buy. Particularly as your kids get older and have to start budgeting more seriously, understanding the difference between essential costs and 'luxuries' will become vital to managing their money well.

Earning money through hard work

When they're young, many kids think money grows on trees, or that £10 notes magically appear from those 'holes in the wall' whenever you need any. Unfortunately, of course, no such scenario really exists - but the sooner you can teach your kids that money isn't just handed out, but has to be earned through hard work, the better.

Give your kids an allowance for helping out with the housework - such as washing the dishes or mowing the lawn. Knowing how to work to earn money can really encourage your kids to make sensible financial decisions in the future.

Image courtesy of www.freedigitalphotos.net