Teaching children about money – tips from Zopa’s dads

Happy Father’s Day to all the dads out there! We asked some of Zopa’s dads how they’re teaching their children about money and what they learned about finances from their own fathers

What are you teaching your children about money and personal finance?

Tim Waterman, Chief Credit Officer and dad of 2, aged 6 and 4: As they’re young we’re mostly trying to teach them the value of money and the importance that they earn their pocket money. They’ve grasped that in order to earn money you have to work for this and in turn this enables you to have nice things.

Neil Kelley, Senior Operations Manager, dad of 4, aged 12, 10, 10 and 6: I think if you feel safe in your finances and can share the value of money with children it helps them get a level of respect for it. My wife and I often openly chat about money and things that are out there in the market. Even if they only take in 5% of what you’re saying each time, it will put them in a great position when they grow up.

Chris Hughes, Head of Operational Services and Analytics, and dad of 2, aged 4 and 2: I want to make sure I instil in my kids the importance of being financially secure – but also to enjoy life, spending money in areas which materially uplift your quality of life or give you experiences you wouldn’t have had otherwise. You only get one life…

Martin Brown, Head of QA, dad of 2, aged 7 and 4: That they need to spend it wisely. Spending a few pounds on a costume in their favourite game is not a good use of spending the money that they earned, and they often find this out the hard way.

And how are you doing that?

Neil: We provide pocket money, rewards for cleaning cars, mowing lawns etc to help them understand the value for money and the effort you need to put in to earn things. We also encourage them to look to sell anything they are no longer playing with to help them save for the new things they would like. Even a couple of pounds here and there helps them to understand the value and benefit of this. This helps them see how things lose value, especially if they’re not kept in good condition and to think about what they are buying.

Martin: They have money boxes for the pocket money they earn for good schoolwork and chores around the house. We often count the saved money with them and then look at the material goods that they want. We then explain how close they are to achieving that goal and when they have enough, we make an occasion out of letting them spend it. Rather than just order off the internet we will take them to a shop to buy what they want.

Tim: Being able to spend a small amount of money is a reward that can incentivise them to practice their maths. If we go to the local corner shop, I’ll ask them a simple question like how many milky bars they can buy for a pound and buy them a sweet if they get it right (often if they get it wrong too...). If they’re after a big toy, we’ll work out how many weeks they need to save before they can buy it.

Martin: Speak to others to have some consistency of approach in your friend and family groups. It’s ok for them to be spoiled occasionally by grandparents and others, but it’s important for all to be on the same page.

How has the way you talk about money with them changed as they get older?

Chris: With Noah (2) I am pretty much just focussed on counting – which is clearly a critical foundation for personal finance!

With Amelia (4) I am starting to try to teach her the concept of money – the fact that we can’t just have whatever we want, when we want it. If you want something, you have to buy it, and to do that you need money. And that’s why mummy and daddy go to work each day.

Neil: Oliver, as the oldest (12), is starting to get exposure to debit cards and a bank account that he can use. This has meant that we’ve also taught him about spending online safely, like looking out for those ‘too good to be true’ purchases that could be scams.

What’s the toughest part about having these conversations with your children?

Martin: If they’ve bought a toy but not thought much about the value, quickly the novelty wears off and the children can get upset trying to understand why they had to spend their own money and that they want to buy something else with it instead. We believe that learning this way will give them a better understanding of money.

Chris: They’re still very young, and so look at me like I am bonkers when I try to talk about some of these things!

Tim: In general, I think they’re really interested in these conversations, however their attention spans are pretty short, so you have to break things up into bitesize chunks to hold their attention. When they really want to spend money on something it can often be hard for them to accept they need to wait.

Neil: Always with children explaining anything at their level is the best way forward. Finance isn’t always the easiest topic, so we often explain things in a number of different ways to see which is the most helpful.

What did your father (or parents) teach you?

Chris: I remember having a children’s bank account from a young age with a ‘passbook’ – which had an entry for each deposit / transaction. Thinking back, I remember being quite engaged with it… Given personal finance isn’t well covered in the education system, I think children’s accounts are a useful learning tool. And responsibility – I had the autonomy to use my savings for what I wanted. I certainly made the odd bad choice and ‘wasted’ money in retrospect, but these moments were good learnings, and likely set me up well for later life and handling larger sums of money

Tim: My dad was a farmer when I was growing up. When he wasn’t out on the farm, he was often doing the accounting, VAT returns and other things related to the business finances. I was fairly interested in what he was up to so got a pretty good grounding in how these things work. In my teens, dad lost the farm as they fell into financial difficulty and things were quite tough for a while. This really shaped my attitude to money. I’ve got a very cautious approach to spending money as a result and, whilst I don’t tend to get stressed by much, money can be the one area I worry about.

Martin: That money has to be earned. From a very early age I would often go to work with my father or one of my uncles, earning money doing various labouring tasks. This would often be during school holidays and weekends. I quickly learnt that it does not grow on trees and you have to work for it, which gives you a better appreciation for it.

Neil: My father has always been a hard-working person and that’s always one of the memories I have growing up as a child. My dad certainly taught me everything has a value and you need to work hard for the life you want to lead. My dad is big on investing and getting value for money, and that’s stayed with me.

What would you say to parents who might not know where to start having financial conversations with their kids? Any tips?

Neil: Just chat little and often about it. Try to break down the barriers and do little things with them. Even when shopping, look at the price of things and do simple maths to understand how much a meal will cost in total. Talk about how you think about money, and budgeting etc. And then drip feed more as they grow older. Don’t be afraid to give responsibility to them around their own pocket money.

Chris: Like many things, I would just say try. Something is better than nothing, and I imagine you will find once you start, it becomes easier and more natural. Pocket money, and a children’s bank account (at the right age) can be useful tools.

Martin: Try not to give the children everything they want! It is difficult to not always do this as you always want them to have the things you never had.

Tim: I think my best advice would be to just have these conversations. Financial literacy is a really important thing and it’s not necessarily taught that well in schools. Having these conversations with your kids can set them up for the future.