As a large proportion of our Advisors are married with children of our own, we believe that there is a profound financial influence to be made on children from a very young age. Let’s face it, even those of you without children have ‘bribed’ nieces and nephews with bars of chocolate or trips to the zoo, to keep them quiet or to keep their room tidy. So how can Finance be introduced to our children who are barely out of nappies without exchanging My First 1000 Words” for the daily edition of “The Wall Street Journal”?

From the minute they are born, children are capable of learning. Parents always try to encourage the positive things in a child’s life – or what parents consider to be positive – and discourage the negative. So why do many parents not adopt the same philosophy when thinking of their children and money.

From an age where they are too young to understand actual ‘money’ or ‘monetary issues’, children should be rewarded with things that they like: be it favourite food, favourite outings or even just quality time spent with them at a time of day which is not usual for them (such as before school or immediately after school). This is seen by them as a reward, much in the same sense that an obedient pet that has just used the litter-tray, accepts and understands the rewards of chocolate.

As a child grows though and sees parents spending money – those shiny coins that children like the look of – they can be taught that money is something that is ‘worth’ something – this is an important sub-conscious message that parents should try early to get across. Let us imagine, would you let your children play with your latest crystal vase that was worth thousands – of course not, so equally, when a child tries to pick up coins or notes, treat this the same as you would for your vase and explain to your child the ‘worth’ of those coins or notes. From such informative years, the start of a child’s monetary understanding will grow.

Parents should always remember, children may be taught about many things at school, but they most certainly are not taught about the Value of Money from an early age at school – in many cases until they are much older and this can then appear in the form of Business Studies. So if they cannot learn about money at school, where can they learn about it? Of course at home or whilst in the company of their parents.

Then we get to the stage of using money as a financial reward for our children – initially usually in the form of pocket-money or an allowance. The earlier you can start giving a child an allowance that they firstly have to earn and secondly can understand that they can spend as they wish, will educate them as to the previously mentioned fact that money is not given for nothing. Tasks can be set such as washing-up, keeping their room tidy or a host of other jobs and the children can be rewarded for successful completion.

Equally, parents have a responsibility to ensure that they do not give or withhold money from a child, without explaining carefully and in detail the reason why they are doing this. This ensures that the child is aware of why they have not ‘earned’ the money or why they are being ‘rewarded’ with it – this is called the Value of Money.

Teach good money habits to your children from a young age by not just talking or explaining about the Value of Money, actions do speak louder than words and if you show the true meaning of the Value of Money by your actions: such as counting change out loud after a purchase, questioning the price of certain things or even complaining about wastage of money by such things as leaving lights on, your child will get an even greater sub-conscious attitude towards the Value of Money.

It can never hurt too much to talk regularly to your children about the Value of Money and as they grow older, the importance of being wise with your money. A child who loses money at a young age through a hole in their pocket or whilst climbing a tree who is not explained the loss and actually feels the loss, will in later life adopt a different Investor Profile than those that are given the time to understand the Value of Money.

As you teach your child other behaviours not necessarily associated with money, money can be worked into these behaviours as examples and as the child grows older, they themselves will make comparisons. As examples, character traits such as generosity, sharing, selfishness and self-discipline can all be explained using money as examples.

The single most important factor about our children, their education and the early introduction of Money as a ‘life-subject’ to be taught, is so that in later life our children have a much better chance of financial security and success if from a young age they understand the Value of Money and all that it entails.

Like most things in life, you are never too young to start learning.