If you’re a parent then you’re probably thinking a lot about cash this summer. You might be thinking of the £584 you’re likely to spend entertaining the kids with days and meals out, according to the Post Office’s Parents’ Summer Spending report.
You might be thinking about the average summer childcare cost, which is now £133 per child per week, according to the Family and Childcare Trust.
And you might well be thinking of the price of the average family break, which sees a family of four typically shelling out £3,600, according to M&S Bank.
Yes, if you’re a parent, this is an expensive time of year, and it’s not surprising that money’s on your mind. However, it’s important not to overlook the chance to teach your kids about cash during the long summer holiday.
After all, research from the Money Advice Service shows 57 per cent of parents agree that they are the single biggest influence on developing their children’s money management skills, yet 58 per cent admit that they find it difficult to talk to their child about money matters.
So, to help make it easy to teach kids about cash and help them develop lifelong money skills, The Independent questioned a number of parents and financial commentators.
Here are their tips on using the summer break to instil essential financial know-how in your kids, no matter what their age.
1. Show them the money
It’s so easy for kids to bypass cash entirely, thanks to contactless card payments and online bookings, but it’s important they learn about what money is and how it works. The best way for them to do that is to see you using actual cash.
Mark Aldred, who works for ATM software company Auriga, suggests: “Keep your own cool head for cash in the summer heat. You’ll be spending more times with your kids who’ll be watching every move you make including how you behave with money. Set a good example of not always using contactless.
“Show how you pay with loose change. And when they ask for something like an ice cream, take them with you to the ATM and take out a small amount of cash to just cover the purchase; teaching them the importance of leaving cash in the bank to work for you.”
2. Take them shopping
By teaching children about budgeting at the supermarket you give them a vital skill and you might even stop them nagging for things at the checkout.
Chris Ogle, a business development manager at the company Flow, does this with his nieces. “I do a little task called the £8 challenge which helps them learn about budgeting. We have a pre-prepared list of ingredients ready that we need to buy from the supermarket, and it is my niece’s job to stay under the £8 limit. They control all the purchasing, so I’ll give you an example we did for a spaghetti bolognese.
“Typically, what happens is we start out in the meat aisle and they pick up an expensive tray of meat. As we go round the store, we write down everything we have and how much is spent and as the budget goes over £8, they have to compromise and realise something needs to change.
“We head back and put back some of the expensive items, in favour of less expensive options.
“The reward, is if they manage to complete the shop under £8, they get whatever treats they want with the change left over. Just like life!”
3. Play Monopoly
You want to fill the long summer holidays and teach your kids about cash? Monopoly does both pretty well.
Moira O’Neill, head of personal finance at the website interactive investor, says: “There are important financial lessons within the game such as the importance to always keep an emergency fund, manage cash flow by earning income and hone your negotiating skills.
“It’s also an introduction to the concept of investments and longterm payoffs (especially as the game can last for hours). It also brings lots of discussion over money and being the banker is great for maths and mental arithmetic.”
4. Give them an ice-cream allowance
It’s hot, kids want ice cream. That’s a good chance to help them learn an important financial lesson.
Zarja Cibej is the founder of childcare app myTamari. Her top tip is to set a budget: “Ice cream is an incredibly power tool for teaching nearly anything to children. I would suggest giving them a small amount of money at the beginning of holidays and explain that that’s their summer ice cream kitty.
“Ideally, give them pennies, so that it looks like a lot, but more importantly so that they have to count!
“Explain how many pennies (or other change) they need for one ice cream, how many days they will be on holidays etc. And help them calculate how many ice creams they can afford, how often etc.
“If you’re game, and your children’s algebra is at the right level, explain the concept by scoops!”
5. Talk about money
No one likes talking about cash, but doing so with your children can make a dramatic difference to their financial decisions once they become adults.
Richard Stone, CEO at The Share Centre, says: “We are all naturally reserved when talking about money, but with children it is important. Talk about the reason you go to work (and the fact that you are on holiday from work), what earning money means, and what different things cost.
“Talk about the price of different things relative to each other and ask your children whether they think that’s right.”
Shane Clifford, CEO of the app WonderBill, says: “Children are observant, so don’t leave them in the dark when it comes to your household bills. Let them know how much you spend as a family on electricity, gas and internet.
“It will make them more aware of those everyday household costs, how turning up the heat makes energy bills increase, and lots of baths make the water bill higher.”
6. And talk about investments
If you want your older children to be really ready for adult finances, it’s worth discussing more complex financial ideas.
Stone adds: “For older children you can have more detailed conversations about savings, interest rates and even investing. The idea for example that they could own a little bit of Tesco or Marks & Spencer makes for an interesting conversation when out shopping in those retailers.”
Anne McClean, chartered financial planner at Charles Stanley, agrees: “Run a fantasy stock pick challenge. Give them an amount to invest as they see fit, run a virtual portfolio on one of the myriad of online resources out there and see who ends up with the most at the end of the period.”
7. Talk about overseas money
If you are taking a summer break overseas then this is a great opportunity to really expand your children’s financial understanding, depending on their age and ability.
Fiona Scott, journalist and media consultant, says: “If you are going on holiday overseas – ensure your children manage their own cash especially if it’s foreign currency. Let them order and handle the cash before they go. Don’t just rely on credit cards with children.
“This teaches them about exchange rates, having a daily budget, working out what things cost in another country, saving from one day to the next to get a bigger ticket item or treat. This is now part of the dynamic of our holiday.
“I do this every year (generally in Europe and last year in USA) and I’ve found it achieves several things: they buy less and don’t continually ask for stuff (often rubbish); usually they end up with one or two souvenirs or items which really remind them of their holiday; they understand that some things cost more in other countries and this leads to discussion as to why that might be; and they learn about saving over a very short time frame.”
8. Start giving pocket money
If you’ve not yet started giving your children pocket money (or letting them earn it as in the next tip) then the long summer break can be a great opportunity to begin doing so and teaching important lessons.
Samantha Seaton, CEO of Moneyhub, says: “Whether its 50p or £5 a week pocket money, simple tricks can help empower your kids to start making decisions about their money and teach them about saving for a treat.”
“Loading pocket money onto a specialist contactless card is a great way to help educate children about the value of money, while retaining some control over what they’re spending.”
Maike Currie, investment director for Fidelity International, adds: “A weekly allowance is a good place to start as it teaches children the value of money. If they are very little this can be used as a teaching tool – for example you could give them pocket money equivalent to their age.
“Don’t fret too much about how much to give them although it is wise to have a conversation with other parents to get a good idea of the benchmark. More importantly help them to use this allowance wisely.
“They should understand the need to set aside some money to save for a goal, spend on treats and the like, and share, like offerings and charity.”
9. Chores for cash
A quarter of parents make their offspring earn their picket money by doing chores around the house. These parents are obviously keen to teach them about the value of hard work as 48 per cent said they would withhold pocket money if those jobs weren’t done properly.
But most parents don’t want to end up paying their kids to do every single chore – it can soon feel like bribery rather than a life lesson.
Poverty campaigner and chef Jack Monroe has found a way to balance paid chores with unpaid tasks as a way of teaching their child what’s expected and what can be earned.
“We have a jar of chores that are expected to be done over the course of a week. around a third of them are rewarded, the rest expected as part of contributing to a household,” they explain.
Monroe has drawn up a list of chores. Those marked with a small butterfly are expected to be completed with no reward as part of contributing towards a functioning household.
Chores marked with medium butterflies earn 10 minutes of tablet time, those marked with a large butterfly earn 20p of pocket money. Jobs range from unpaid “tidy the floor” to a paid “help muck out the bunnies”, teaching a variety of self-reliance and motivations.
10. Be firm
We all want our children to enjoy their break, so if they mess up their money management lessons then it can be tempting to bail them out and buy them a few extra treats. But perhaps it’s worth considering what that teaches them.
Ben Faulkner, communications director at EQ Investors, says: “If you’re heading away for a few weeks set a budget for them by providing a regular, set amount of money each day.
“If they blow their day’s spending and don’t have enough for a treat later in the day, they learn first-hand the consequence of overspending.”