We let our daughter take charge

By STEPHEN WOMACK
Updated:

 

Anna Speed, 14, has a monthly allowance of £65 and the freedom to spend it where and when she chooses. But she is also responsible for buying her own clothes, paying for her mobile phone and treats.

The Speeds

Anna, who lives near Lutterworth, Leicestershire, says: 'I like being in control and try to keep in my head exactly how much I have to spend each month. The allowance has changed the way I spend. I buy fewer shoes and have switched my mobile phone to a different tariff to save about £10 a month.'

Her parents, Bruno, 51, and Ritva, 48, transfer the allowance by monthly direct debit into Anna's Nationwide Smart account. This comes with a cash machine card so Anna can keep complete control over her money. They plan to do the same for her ten-year-old brother Alexis when he is older.

Bruno, a director of an engineering business, says: 'Anna enjoys her independence and has impressed us by how good she is at budgeting. She doesn't covet designer labels and instead goes out and shops for bargains.'

Though schools and colleges can help children gain a better understanding of finances, the most important lessons are often the ones they learn at home.

Vivienne Starkey, independent adviser at Equal Partners in Holborn, central London, says: 'Children copy their parents, so the example set at home will often carry through to adulthood.'

Gillian Edwards is a parenting expert and assistant director of the New Learning Centre in Hampstead, north-west London. She says: 'Parents have a role to teach and coach their children. Dealing with money is an important part of this training.

'Pocket money or other rewards should be earned. We wouldn't expect to get paid if we didn't turn up to work and you need to instill the same sense in children.'

She suggests setting up goals and tasks linked to pocket money, with perhaps a modest basic payment each week and the chance to earn more by doing simple chores. As children grow older, so pocket money tasks can become more demanding and the rewards more generous.

Starkey says: 'You only learn to read by practising. Money is the same. You will only learn to budget and save if you get the chance to practice as a child.'

She recommends parents set up savings accounts for their children and encourage them to use them under supervision.

Money play is also important for children, especially as the spread of credit and debit cards means they see less of cash in day-to-day life.

Maximise your savings

This is Money has a wealth of information to help build your savings...

Coin

Edwards says: 'Children love shopping games. They can learn about money, counting and numerical skills.'

Starkey adds: 'A friend of mine recently asked his children to clear out unwanted toys and then they all sold them at a car boot sale. The children could keep the money and have fun and learn about dealing all at the same time.'

As children grow into teenagers, parents can start giving them more responsibility for their own money.

When older children are trying to save for major purchases, Edwards suggests parents match what a child earns or saves. This shared approach can also help diffuse tensions over a contentious area for teenagers - mobile phone bills.

Starkey says: 'One option is for mum or dad to agree to pay a set amount each month, then make the child responsible for any spending on the phone above that.'

Most watched Money videos