No wonder experts say parents should introduce their children to basic financial matters at an earlier age than ever.

London - The idea of your children reaching 18 with no understanding of money would worry most parents, not least because young people face a far more complicated financial future than previous generations. Tuition fees, student loans and higher living costs are just a few of the financial hurdles awaiting them at the door to adulthood, yet research shows that one in three teens believes buying something on a credit card is not spending money.

No wonder experts say parents should introduce their children to basic financial matters at an earlier age than ever. “Teaching children the value of money from an early age provides a good foundation for their future spending habits, and sends positive messages about managing finances and living within one's means,” explains Simon Walsh, spokesman for Family Lives. “Their observations of how you spend, save, budget and donate to charities can shape early views about money management.”

Get them involved in making their own financial decisions too. “My eight-year-old son Henry knows that if he wants something, he must select a few items he no longer wants, photograph them, write a description and put them on eBay,” says Rebecca Gunn, 39, who lives in Bedfordshire.

Like many parents, Gunn also uses pocket money to help her son to understand its value. “It stops him walking into a shop wanting everything he sees. It makes him think about what he wants and he enjoys weighing up the pros and cons of things as the week goes on.”

Research from Equifax reveals a growing emphasis on encouraging children to “earn” their pocket money through basic chores such as washing up and tidying up. The average amount children receive, according to another survey by Halifax, is £4.57 (about R60) for eight-11 year-olds and £7.02 for 12-15 year olds. “Each of my two children, aged five and seven, has a special job around the house once a week,” says Sarah Brown, a 40-year-old mother from Kent. “It means they realise they need to contribute something to earn money.”

A vital component of the pocket money concept, she believes, is that kids discover their own spending power. “This is where, as a parent, you have to get the balance right between parental advice and allowing your child to make their own decisions - and therefore mistakes. It's definitely given my children an understanding, which did not exist a year ago, of how important it is to know how much things cost,” says Brown. “Even simple things like checking the price tag on the box to see if it's affordable, is not something you see many kids do. Perhaps most satisfying of all is that my eldest, has opened a bank account and is already beginning to grasp the concept of interest.”

When your children hit their teens, consider swapping pocket money for a monthly allowance, but the same principles apply, advises Pritee Chohan, Money for Life Programme volunteer and a branch manager for Halifax. “Sit them down to explain the differences between the savings accounts on offer and help them to budget for that holiday with friends or for driving lessons. By the time they leave home, they should have all the money savvy they need to make a great start in life.” - The Independent