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Teaching children the value of money

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Primary pocket money saving child piggy bank
We've teamed up with Steve Rees, an expert on debt, to share his successful saving tips. This week, Steve gives his advice on helping your kids understand the value of money.

We live in an age of wanting everything now and keeping up with the Joneses, and that attitude has already extended to our kids - they want the latest designer trainers, then the next games console, then a new mobile phone, just to keep up in the playground.

Children rarely understand the value of money, so it can be hard to say no. But to help the problem, it's well worth trying to teach your kids how much things cost, so they'll understand the situation better if you're a bit strapped for cash at the moment.

Steve's 5 top tips to help your kids learn about money

1. Teach them from an early age about money. For example, if your child wants a new bike or toy but money is tight, it would be a good time to try to explain the saving process. If they have to put money aside to get what they want, it will mean much more to them.

2. Give them pocket money in pound coins rather than notes. You can use this as a way to explain the value of saving and spending. Make them think about what they could do with a pound, rather than five pounds, so they begin to understand that they need to look after the smaller amounts to eventually reach a bigger goal.

3. Tell them your weekly shopping budget and get them to help you choose what goes into the basket. When they realise buying sweets and goodies would mean the rest of the family having nothing to eat, it will make them understand budgeting, learn responsibility to others, and help them think about healthier food choices.

4. Paying them for odd jobs will boost their understanding of responsibility and rewards - offer a 'pocket money bonus' if their bedroom is kept tidy or they wash the car. By offering the freedom to earn a little extra, they will grasp a work ethic sooner.

5. Agree to pay for half of something they want, and make them save for the other half. This will help them understand they can't have everything at once, and they'll value their prize more readily in the end because they've had to work for it too.

Written by Steve Rees, managing director of Vincent Bond & Co. Steve also sponsors iva.co.uk - a free-to-use personal finance forum.

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Where to next?

- More from Steve: First steps to dealing with debt
- Stop doing this and save money
- Save money on kids stuff

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