How to teach children about money

Making sure your kids are money-aware

School is the right place for kids to learn about maths, English, science and socialisation, but parents play a major role in teaching their kids about money. And by money, we actually mean money management. This kind of learning starts at home, from a very young age and can set your child on the right or wrong path from the get-go. 

We’ve set up this guide to help you on the road to teaching your children about money. Whether you’ve had money problems in your life or not, you can teach your kids to be responsible with their money and to understand its value. Simple rules like repaying short-term loans on time, never borrowing more than you can afford and saving little and often can be invaluable. And, like so many things in life these days, there are some pretty useful tools available online to help you. 

Why is it important to teach your kids about money?

Research by moneyhelper.org.uk found that only 40% of children are taught about money and finance in school. We all know schools are stretched and the curriculum is heaving with important topics that the teachers have to get through, but money should be up there as a topic for discussion at school. 

However, in light of the fact that your child is unlikely to have any significant school-based education on money and finance, it’s over to you. The Money Advice Service says that a child’s view of money can already be set by the age of seven. This is why teaching children financial responsibility from a young age could help prevent them from getting into debt when they are older. 

The right financial education may help your child understand the importance of saving, it could help them to buy their first house, get through university with minimal debt, or even set them up with a healthy work ethic. 

What do we need to teach our kids about money?

Understanding the value of money goes much further than simply knowing how much things cost. It’s about understanding that we can’t just have whatever we want immediately. We often have to save up for expensive items. It’s also about being able to stick to a budget and prioritise spending. 

Children are growing up in a very consumerist society. They can see how the ‘other half’ live online and on the TV all day every day and this can lead to an infatuation with buying and consuming. Let’s face it, we’re all guilty of buying too much and sending more than we need to on material items from time to time. 

Good financial education equips kids with the knowledge that, in order to buy things, you need to pay for them. And in order to pay for them, you need to work and be responsible with your earnings. 

Then there are practical things like using an ATM, taking out a mortgage, what current account and savings accounts are and even important things like pensions and insurance. These are all vital parts of life for most adults in the UK, and failing to teach kids the basics about these topics does them an injustice for life. 

What’s the best way to teach kids about money?

Perhaps the best way to teach children about money is to give them some. Pocket money is no new thing. Parents have been giving their kids small amounts of money on a weekly or monthly basis, for them to spend as they wish (within reason) for decades. However, in a close to cashless society, the old traditional way of handing over pocket money can seem a little redundant. 

Instead, try out a pocket money app, which allows parents to transfer a weekly or monthly amount to a child, who then manages their cash through an app similar to an online banking app. This helps them to practice managing their money this way and they can even use it to pay for things online or with a prepaid debit card.

Pocket money apps allow kids to track the money in their accounts and spend on a prepaid debit card. This means there’s no chance of them spending what they don’t already have –  a great lesson for a financially healthy life!

Quick Look – top pocket money and money management apps for kids to explore:

 

Gohenry

Roostermoney

Starling Bank’s Kite app

Beanstalk

Toca Store

Money Twist – My Choice

Some of these apps offer extra tools, games and tracking services that will actively teach kids about things like saving and budgeting. They are also accessible for parents, so you can keep an eye on your kids’ finances at all times.

How can you teach younger children about money?

Pocket money apps are most suitable from around the age of seven. For younger children, there are lots of ways to bring money awareness and management into their lives in a fun way.

  • Give kids money as a reward

 A basic way of teaching children about the value of money is to pay them small amounts for jobs that they carry out around the house, or when they are particularly helpful. Do this consistently and they will start to build a link between responsible behaviour and financial reward.

  • Encourage saving

 The best way to encourage young children to save is to give them a piggy bank they can see into. A transparent piggy bank is a great way to help very small children develop money-awareness and get that buzz of adding more money to their savings. You can talk to them about what they are saving for and encourage them to hold onto money instead of spending it immediately. 

  • Needs and wants

 Children of all ages are prone to talking about how much they “neeeeeeeeeeeed” the latest toy, device or even just a snack! This is your cue to talk about needs and wants and the difference between the two. Drumming this into your kids from a young age may help them to prioritise spending on what they need, rather than what they want, when they are adults and responsible for running their lives and their homes.

Money doesn’t have to be boring…

Teaching your children about money doesn’t have to involve boring lectures or even the old-fashioned bank account and building society approach. These days, you can get your kids engaged with financial responsibility through apps and online tools that help them to feel the thrill of saving, rather than spending. 

Looking for a direct lender loan on a realistic payback schedule?

Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk

Representative Example: Borrow £400 for 4 months, four monthly repayments of £197.48. Total repayment £597.48, interest rate p.a. (fixed) 255.5%. Representative APR 939.5%. Compare Moneyboat loans.

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Warning: Late repayments can cause you serious money problems. For help, go to moneyhelper.org.uk