Last updated on Sep 18th, 2015 at 09:50 am

It’s never too early to teach children how to work with money, along with the important lesson that financial wellness is key to building independence and self-worth later in life. These may seem like big concepts for small people to grasp, but a recent University of Cambridge report revealed that a child’s relationship with money is formed by the age of seven.

School holidays – a great time to teach your child about budgeting, saving and borrowing money

“There’s so much going on during term time, that the upcoming school holidays are a great time to focus on teaching your children about budgeting, saving and borrowing money,” says Frank Magwegwe, CFP and Head of Momentum Personal Advisory Service. “You can share your own lessons about financial wellness with your children during this time, or you can turn to a trusted adviser for advice, particularly if you have realised that your own relationship with money isn’t ideal and want to break that cycle for the sake of your children’s future.”

Multiply, the wellness and rewards programme offered by Momentum, offers some valuable advice to teach your children the basics about financial wellness, with loads of great tips and ideas to put in place during the holidays.

“Financial wellness is a far more important concept than the accumulation of wealth. Children are often taught that an abundance of money is equated to success, and later on in life, self-worth. Multiply’s helpful hints teach children the role of responsible money management and fundamental habits that will equate to financial wellness, self-worth and independence,” says Magwegwe

Subscribe to our Free Daily All4Women Newsletter to enter

1. Budget basics: The power of choice

Empower children with choices that are hard for them to make, such as the choice between a school holiday activity and a greatly-desired toy. This teachable moment introduces two choices and the responsibility to live with the consequences within financially acceptable parameters. The structured choice between two acceptable options presents a safe environment for young people to become competent decision makers.

According to, “Messages are subjective, and inherently reflect judgment. Lessons, on the other hand, are objective and neutral in tone. Messages can invoke shamefear, and guilt. Lessons can empower.”

Activity: Present your child with two options within the same budget, for example, a desired experience and a toy/possession of the equivalent value. Explain that only one option can be chosen, and that this can only be achieved at the end of the school holidays if they save their daily allowance (divide the amount of holiday days by the actual cost and present this amount to be saved daily).

2. Delayed gratification: The marshmallow theory

Building on the initial option to select one of two purchases at the end of the school holidays, teaching the value of choice and reward is probably the most important financial wellness lesson your child will ever learn.

In the ’60s, Stanford University researchers presented nursery school children with a tray of goodies. They asked the children to select one treat and if they ate it immediately they wouldn’t get another, but if they waited only a few minutes, they’d receive another one. If they could delay their gratification for a few moments, they’d double their candy. They observed the children until they were adults and learned that the ones who were able to delay their gratification achieved much more success in life than the ones who wanted instant gratification.

Activity: Create two jars for your child’s money matters. One jar will be labelled “spending”, where the school holiday daily allowance will go, so they can see their money grow daily. The second jar is labelled “saving”, which is where the money earned for completing chores goes. Every time your child adds money to the savings jar, help them count how much they have, and talk with them about how much they still need to reach their holiday goal. You could add money to the savings jar from time to time to teach the joys of delaying the spending and introducing the concept of interest.

Your child should be given the opportunity to use this money for more expensive aspirations and later open an account to save and earn interest with a bank.

3. Holiday debt: Prevent expensive mistakes

“Debt and bad financial choices are synonymous with adulthood because of gaps in financial education at an earlier age,” comments Magwegwe. Now that your children are earning money by doing chores, introduce the concept of debt, to prevent bad debt habits later on in life. The consequence of their choices will take time to learn, but the ‘holiday mode’ expectation of receiving more stimulus and entertainment than usual, is the perfect place to start.

Activity: When your child requests an outing or purchase during the holidays, present them with three options:

  1. Buy it now (with ‘spending’ jar money)
  2. Buy it later (with ‘saving’ jar money)
  3. Borrow the money from parents

At first children will select the debt option because they haven’t yet realised the consequences of debt. For this option, devise payment terms and implement the option like a regular loan, with interest.

For more helpful tips on financial wellness and other money lessons to teach your kids, visit the new parenting hub, EDUCATION360° from Multiply, at Multiply and EDUCATION360° offer parents all the tools, tips and tricks to guide them and their children on a path to success and financial wellness.