In light of International Children’s Day, which takes place in June, we’ve been thinking about the most important skills we learned during childhood. Funnily enough, money management ranked highly. Now, whilst financial lessons aren’t always top of the educational to-do list fConversely,or most parents, building good habits around money – and budgeting – can serve children well for the rest of their lives.


According to a study published by the Money Advice Service, habits that are formed in childhood can influence a person’s long-term relationship with money. Authored by experts at the University of Cambridge, the study found that children who are encouraged to experiment with spending and saving (whilst making age-appropriate decisions relating to financial management), can form positive habits when it comes to money—thus promoting healthy financial behaviour in adulthood.

Money is central to day-to-day life for adults, after all: from parking one’s car to doing the shopping (or even turning on the heating), most activities we undertake have a transactional nature (or bear a cost). In this blog, we’ll run through some quick, easy ways to help your children develop a healthy relationship with money.

How to Teach Children About Money

The study referenced above ‘highlight[ed] the power of parents to foster money skills at home’, whilst confirming that ‘adult money habits are set by the age of seven years old’. As such, our tips are aimed at children who are aged six and above; though introducing the topic of money earlier on can be useful, so that children begin to build a vocabulary around basic finance.

Where to start:

  • How can we look after money? If your child doesn’t already receive pocket money, this is a good time to introduce the concept—and how they will keep it safe. Are they able to grasp the notion of a bank account? Or would they prefer to keep their pocket money in a money-chest or piggy bank at home? How will they keep their money safe when they go out (to the cinema or shops, for example)?
  • How can we save up for the things we want to buy? It’s really useful for children to appreciate that instant gratification isn’t always possible: if there are special things we want, we need to save up from them. Help your children make a plan for how to do this: how much does the object of their desire cost? How long will it take them to save for it? How much will they need to put by, at regular intervals, to make this possible? You can also begin to introduce the idea of earning interest: if they put their money in a certain bank account, they can earn interest on it, and this will help their savings go further.
  • The difference between types of spending. It’s important to be able to distinguish, at an early age, between ‘essential’ items and ‘desires’ (i.e. needs and wants). There are lots of ways to introduce this topic. You could talk about it; make a list; or, if your child prefers visuals, draw a picture of different items that people need and items they want. This will help them learn the difference.
  • Security. If your child is tech-savvy and would like to save money in a bank account, this is a great time to talk about the importance of online security. Make sure to impress upon them the importance of choosing a strong, unique password, and committing this to memory; and also that they should take care when disclosing any details related to their bank account.
  • Savvy shopping. When you’re out and about, you can ask your child to help you compare prices between different items—own-brand and designer shampoo, for example. You can also have a look at the prices of items across different shops, or online. Help them see how you can save money if you choose carefully—both in terms of where you shop and what you buy.

Peer pressure and budgeting

As children get older, peer pressure becomes more significant: it becomes more important to own the latest pair of shoes or the latest gadget that their peers hanker after at school. Learning to manage their money can be really useful for children, as it will help them cope with peer pressure.

If there is a particular item your child wants—perhaps because all of their friends have it—use this as an opportunity to practise budgeting and saving.

  • First, sit down with them and discuss the item they want—and how much it costs.
  • Next, draw up a little budget: track their income (whether that’s through pocket money, birthday/Christmas, or odd jobs), and what they typically spend it on.
  • Discuss how much they could realistically save and how long it will take to save enough to purchase the item they want.
  • Encourage them by coming up with new ways to earn money, or ways in which they can reduce their spending so they can save more money more quickly.
  • Check in with them regularly and look through the budget. Ask them to explain their notes to you and discuss what they will do if they don’t meet their savings targets (or if they go over budget in other areas). You can also discuss how you budget and ensure that you meet your obligations (how you make sure you have enough money to pay household bills, for instance).

Have fun!

Teaching good financial habits doesn’t have to be dull—in fact, the more ‘active’ and interactive you can make it, the better!

Got any unwanted items lying around the house? Why not go to a car boot sale or set up an eBay account? You can put your child in ‘charge’ (with supervision): allow them to think about setting a value for each thing you wish to sell, haggle with customers over the selling price, and collate an inventory.

Make it a game: there are lots of board games that can be helpful when it comes to money management, from old staples like Monopoly to newer games like Money Match Café by Orchard Toys. There are also plenty of fun resources online: credit agency Experian have created the excellent website Values Money and Me which offers fun quizzes and online books (which may interest even the most unenthusiastic of pupils)!

You can also invent your own games at home. When it comes to getting a Friday night takeaway, for example, why not count out some cash, give this to your child, and ask them to work out your order from the menu—what can you afford to get, how many portions, and how much money you’ll have over (if any)? Make sure to set a budget!

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