Even at this early age, children have begun to build attitudes and habits around money. By age 7, research shows that children’s attitudes about money are well developed. This makes it important to start building good money habits as early as possible.
Parents and carers play a key role in preparing children to manage their money well as adults. There are direct links between what parents do and their children’s financial behaviour.
If you find it hard to talk about money, as many people do, use these ideas and activities on how to talk with your children about money to help them avoid difficulties in the future.
How does talking about money affect young children?
Some parents are concerned about exposing their children to money at an early age. However, our research also shows that children who do better with money as adults are:
● exposed to conversations about money
● given money on a regular basis (it doesn’t matter how much), and
● given responsibility for spending and saving.
Won’t they learn about money at school?
There are children who receive financial education in school as part of the secondary school national curriculum in England or the primary and secondary curriculum in Scotland, Wales and Northern Ireland. However, from our research, four in ten children say they received no financial education in school.
What can children understand about money at this age?
There are a range of things that children can begin to understand, including:
● the correct value of coins and notes
● the importance of waiting for and checking change when they pay in cash
● the need to keep track of money and what they spend it on
● they might run out of money if they don’t keep track of it
● they can choose between spending and saving money
● how to make a simple plan for spending money, like a shopping list
● how to check how money has been used, for example on receipts
● the difference between needs and wants
● money needs to be kept safe, the consequences of losing money or having it stolen, and how it makes you feel
● where money comes from.
If you’ve been talking to your children about money already, keep doing all the things you were doing when your child was younger. Children are still learning through play but are also starting to pick up more from what is going on around them.
Talk about saving money
This is a good age to talk more about saving money. Children can start to understand the idea that you sometimes have to save money for things. Learning to wait will be an important character trait as they grow up.
Try these saving activities:
● think of something small to save for as a family. Save together in a penny jar or bank account
● talk about ways to save money, such as turning off lights or buying fewer things
● ask your children to help you come up with ideas to save. They could draw a picture of things they are going to try
● keep track of your savings together and when you have enough, enjoy your treat as a family.
The power of a money box for children
Think about having a safe place for your child to keep money, like a money box or piggy bank. Talk about why it is important to keep money safe and how you do it.
Having a safe place to keep the money that the children save will also help to illustrate saving in a visual way.
Read our guides on on saving for your children and children’s savings accounts for more details.
This is a good age to think about whether you want to pay your children for doing small jobs around the house.
Use everyday events to talk about money together, for example:
● what do children see and hear being said about money on TV or in films? Discuss it with them when a character buys something
● talk about how adverts try to make us buy things, but we don’t have to
● if your children are asking for things with pictures of characters, brands or celebrities on them, talk about why. Does the picture on it really make it any better?
● if your child goes online, explain that app purchases or buying new games also cost money. Make rules about what you spend money on, explain them and stick to them. Ensure you have passwords to stop them buying things online without your say so.
At the shops
Shopping trips are practical times to talk about the choices you’re making to spend or save money.
Try these ideas to involve your children:
● children love a challenge—can they help you save money? Make a list with them and have them help you stick to it
● talk about needs (e.g. food for dinner) versus wants (e.g. treats)
● talk about the value of money—what can £1 buy? £5? £100?
● set a budget for an area of your food shopping that your child has an active interest in - for example, items for their school packed lunch, or foods they enjoy. Remember, ensure that the choices offered to your child are both foods that they will eat, so that the discussions are about money more than food.
● create a visual situation in which your children can make a decision – such as when you are buying fruit or snacks, then they know when they can help you to make decisions.
As you shop
Help your children get used to making decisions about what to spend money on:
● show children that some packages are bright and colourful and cost more, while others might be dull and less fun—but what is inside is nearly the same and can cost less
● invite your child to ‘help’ while doing the family food shopping by making choices where cost is a factor.
● show them groups of items that cost the same in total and offer a trade-off between different products. For example a small punnet of blueberries and 5 bananas or a large punnet of grapes and 3 bananas, branded cereal and ordinary bread or supermarket own brand cereal and bagels. Allow your child to choose different elements of a picnic lunch at a given a price limit.
If running these activities with more than one child, allow them to try and reach a decision jointly. If this proves difficult, allow them to make one choice each.
Try to spread consumption of all items across the week and resist pester power if your child eats all their favourites first.
Children can now better understand why you buy some things but not others. You can explain that you have money for what you need right now (like food) but have to save for extras like toys.
Activities like this will help to you convey some key messages about money in your conversations and your actions:
● when money is gone, it’s gone
● your child has to live with the choice they make
● if your child has chosen an item for the whole family, they need to recognise the consequence of their purchase on other members of the family.
Dealing with pestering
It’s normal for children to ask parents to buy things. Peer pressure, adverts and marketing make them want things that perhaps they don’t need. However, it doesn’t mean you have to give them everything they want.
It takes time to change behaviour. If children are used to getting what they want, they may get upset when this changes. Don’t worry about reactions from others. With time, children can change how they react. These ideas can help your talk with your children and avoid or reduce pestering behaviour:
● if you are going somewhere tricky like a toy shop, plan ahead. Explain beforehand what you are buying and why. Remind your children of what you’ve discussed
● encourage children to save up for things they want. If they decide to spend money on something, it is their choice. If they later regret it, talk with them about what they can do differently next time
● suggest that children put what they want on their birthday or holiday list. Often this helps children to feel heard and deals with the want, and they may even forget about it. When you get close to their birthday, if they don’t want the items anymore, they can make a new list. But it is a good way to show children how things they want change and are not always things they need
● don’t just say no to children, explain why. If you are not happy with what they want, explain to them what you choose to spend your money on and why
● saying we have money for what we need (such as food and heating) but not wants or treats right now helps them understand choices adults have to make about money.
Saying no and sticking to it, especially if you use it as an opportunity to talk to your children, helps them to learn self-control, to understand the difference between needs and wants, and to learn to save up for what they want.
Out and about
Use a visit to your local book or toy library as an opportunity to explain that not everything has to cost money. Talk about things that don’t cost money that you can enjoy, and plan free outings together.
Download ideas and activities for children age 3-11 in the Talk, Learn, Do guide.
The Talk, Learn, Do guide is also available in Welsh.