Most important money lessons for children revealed

Not purchasing something you cannot afford is the most valuable piece of advice UK adults believe children should be taught, according to a new survey by Think Money.

People were asked what the most important money lesson was for children growing up and telling them not to buy things they do not have the money for came out on top (37 per cent).

Telling them to always live within their means came in second, with 23 per cent using this piece of advice, while encouraging them to save a little money each month was the third most cited, with 16 per cent.

One of the timeless financial sayings in the UK is "look after the pennies and the pounds will look after themselves" and this is something nine per cent of parents are telling their kids. "Money can't buy you happiness" was another popular quip, with eight per cent of people using it.

Many individuals have found out the hard way that borrowing money from lenders can lead to mountains of debt, which can cause havoc to their lives.

For this reason, it is not surprising parents tell their children to try to avoid borrowing money if they can so they do not fall into the same trap. Indeed, seven per cent of people give this advice, but realistically it should be more.

Interestingly, younger and older people have different ideas about what is most important to teach their children, or indeed those of others. For example, a quarter of 18-24-year-olds think it is vital for children to try and save something each month, but only nine per cent of 55-64-year-olds and just seven per cent of the over 65s agree.

Meanwhile, older people (31 per cent of the over 65s) believe it is more important to teach children to always live within their means, compared with just 13 per cent of the 18-24-year-olds who say the same. It appears the younger generations value saving money to be used later in life, while older individuals think it is important to stay clear of debt.

It seems children do not know much about finances as Think Money has released a new video showing they do need a bit of guidance when it comes to money. Some of the kids guess the cost of a house ranges from £1 to £2,000, while some predict their parents earn between 1p and £5.

Ian Williams, director of communications at Think Money, said: "It's funny to see all the ideas that kids come up with about money. It's important to try and show them the value and importance of money from an early age, though, for example by giving them a money box and a small amount of pocket money each week. How you encourage them to use that money is up to you."

Parents should use their experiences with finances to teach children how to budget and encourage saving. However, one of the best ways to get them on track is to set a good example. Showing that you too are living within your means and putting money aside for a rainy day could instill good financial practice into them, allowing them to prosper when they grow up.

By Joe White