How To Teach Children About Money In The UK
Teaching children about money from a young age helps them develop good financial habits when they’re older. As well as saving up for something special, this informal education can set them up for a lifetime of security and prosperity.
Whether your children were born in the UK, or your family has moved here from abroad, here’s how you can teach your kids about money in the UK.
Why it’s important to teach children about money
There are lots of reasons to start teaching your children about money at a young age. These include:
- Understanding the value of money
- Learning discipline and the value of delayed gratification
- Giving children the confidence to manage their own money when they get older
- Teaching children how to plan for the future and set goals.
Ultimately, teaching children about money helps build generational wealth for your family. If you pass on good financial habits to your children, they’ll prosper.
Is it too early to teach my children about money?
Studies suggest that by the age of seven, most children can understand the value of money. So as long as your child is old enough to have a conversation about cash, it’s not too soon to start helping them practise good money habits.
A child can open a savings account in the UK at the age of seven. Under sevens can also have an account, but their caregiver will need to set up their account on their behalf.
Adults can usually still manage and withdraw cash from their child’s savings account until the child is 16.
How to talk about money with your child
Money is a complex topic, and lots of adults don’t feel comfortable discussing it. But as the parent or caregiver, you need to talk about it if you want your child to understand it.
Here are some tips for talking about money with kids:
- Discuss money in front of your child — normalise talking about money at home by discussing it out loud or with your partner
- Use simple, relatable examples — help your child understand money by using examples that relate to things they know about
- Don’t set expectations — don’t expect your child to understand financial concepts quickly. It’s more important that they feel able to ask questions.
How to approach money management at each ageIt can be tricky to know how much to tell your children about money, especially if they’re still young. So here’s how you can approach financial education at each age.
Early years (age 3-5)
Younger children are starting to learn to count, which is the first step in understanding money.
At this early stage, it can be easier to teach children about money if they have something they can hold and see, such as notes and coins. Let your children handle cash, helping them count the coins (without worrying about the value of different coins at this stage).
If you haven’t already, start saving for your child’s future by setting up a UK trust fund, Junior ISA or another savings account on their behalf.
Early primary school (age 5-8)
As children start to understand the value of numbers, you can start to play games involving money, such as:
- Asking them to tell you how much things cost as you’re shopping
- Setting up a play shop at home
- Helping them understand the value of different coins
- Introducing the idea of pocket money as a reward for doing jobs at home
- Giving them a piggybank so they can save up for something they want, rather than you buying it for them
- Taking them to the bank to open their own savings account, or helping them open one online.
Later primary school (age 8-11)
Children will have begun learning about money at school. So they’ll have a better grasp of what money is for and how it’s used.
You can continue this education at home by:
- Helping them plan a day out on a budget so they can better understand real world costs
- Introducing them to online banking and money apps
- Helping them differentiate between things they want and things they need
- Talking about adverts and how they’re designed to encourage people to buy things
- Doing the marshmallow test — see the video below!
Teenagers (age 12-15)
When they start secondary school, kids want more independence. At 15, they’re almost old enough to leave school and get a job. So around now, expect them to want to manage their own money.
Help teenagers with money management by:
- Giving them control of their own money
- Starting a familto help them save and experience financial commitments
- Helping them understand the risks of online fraud
- Encouraging them to ask questions if they’re unsure about a money-related decision
- Not getting upset if they make bad financial decisions — these are lessons they can learn from
- Continuing to set good examples in your own money management.
Kids that have flown the nest still need advice and support sometimes. Most of our biggest financial decisions don’t happen until we hit adulthood, so expect questions on mortgages, pensions, taxes, student loans, and more.
Don’t be afraid to admit if you don’t know something, and help them find a resource for reliable financial information.
What do children learn about money at school?
Money management wasn’t on the school curriculum in England until 2019. Fortunately, kids in England now get some formal money management education.
At primary school level, this includes:
- Recognising money symbols like £ and p
- Learning to do simple money sums
- Learning how to calculate and give change
Secondary school finance lessons will teach older children about:
- Budgeting and planning for the future
- Calculating interest
- Financial risk
- Credit and debt
- Financial products like insurance and pensions.
It’s not always easy to apply classroom learning in the real world. That’s why it’s so important for children to see you setting a good real-life example from a young age.
How money clubs can teach children about money
Money clubs are an informal way to pool funds. You can set one up with whoever you like, with a monthly payment of your choice — so this can be a great way to teach older children about money.
Money clubs are a useful tool for teaching children about money because:
- You don’t always need a bank account, so kids can pay in cash if necessary
- Each member needs to contribute on time for the system to work, teaching kids about financial obligations
- You can set a low contribution — even a monthly payment of £5 can teach them to honour their financial commitments
- The money they pool will be paid back to them, which they can spend on something they really want.