Even at the best of times, explaining the mysteries of money to a child is never an easy task; let’s face it, a lot of credit-crunched adults are pretty confused about the subject at the moment too. But here are some tips:

1. Take them on the weekly shop

Have your child keep track of what’s being spent in the market. See if the amount they add up matches the total amount spent. Some people think it’s taking away their youth to talk about money, but, at a level they understand, it’s fun and stands them in excellent stead for the future.

2. Put them to work

Earning money by running errands is a way of giving children control over their decisions and their money. Similarly, having them save up for something is important, as they appreciate its value more and will take pride in having it. So when they might be watching TV or playing with their friends give them the opportunity to work for a little money.

3. Show them the basics of investing

A good time to do this is between the ages of 10 and 12. Ask about the things that they like - Schweppes drinks or Cadbury’s sweets, say - then put down their shares on paper and have them track them weekly.

The children become intrigued - they look at companies, at their friends’ habits, and before long, they’re understanding supply and demand. It’s a nice way to comprehend how things are affected by forces beyond them.

4. Fund them in instalments

If you shudder at the bill your teenager could run up with credit, pay pocket money into an account attached to a debit card. If you pay the money in once a month or quarter, the child has to stretch his or her money out over time. And if they overspend, don’t top it up!

5. Tell them about credit

The most important thing is to put a limit on things like mobile phone bills. Otherwise minor spending problems just get bigger as they get older. I’m also not against giving a teenager a credit card with a very fixed limit. Today credit is how you build access to houses, loans and so on, so it’s a good idea to learn that behaviour early.

6. If you can, open a child’s savings account

Do this when they’re small - seven or eight years old. Have them put birthday and pocket money in the account. Kids love it: although they’re too young to understand complex growth of money, they can understand accumulation.

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