Children begin to develop attitudes around money as early as five years old. With your help, these can be positive and healthy.
How does talking about money help?
Talking about money is the first step in building children’s financial skills and confidence.
Our research shows that adults who do better with money:
- had conversations about money as children
- were given money regularly, such as pocket money or payment for chores
- had responsibility for spending and saving from an early age.
Did you know?
Our research shows that only four in ten children learnt about money at school.
What five and six-year-olds understand about money?
By around five and six, children are starting to understand and question money-related basics.
They’ll be able to understand that:
- different coins have different values
- pennies lead to pounds
- money needs to be kept safe, so they don’t lose it and others don’t take it
- losing money can be upsetting
- saving money helps them buy items they want
- some money can’t be seen, such as money in the bank
- they can do things to ‘earn’ money, such as being good or helping around the house
- there’s a difference between needs and wants.
Now is a good time to make the most of their growing better understanding of money.
Keeping money safe
Giving a child a money box or piggy bank provides them with a safe place to keep, and save, their money.
It’s a good idea to make sure children have a safe place to keep money. And to talk about why it’s important to keep money safe and how you do it.
Encourage them to save
Many five and six-year-olds are starting to understand that you sometimes have to save money for things you want.
They may still get frustrated about waiting for what they want. But learning to save money now help them learn to be patient.
Try this savings activity:
Choose – ask them if there’s something they would like to save for that the whole family can enjoy – perhaps a game or a trip to the cinema.
Visualise the goal – ask them to draw a picture of what’s being saved for. This is the goal and will help motivate and keep them on track.
Problem-solve – together, come up with ideas to save money. For example, turning off lights or buying fewer items.
Visualise saving – ask them to draw these savings ideas around their previous picture of the goal.
Act – let your child look after the savings in their own money box or piggy bank. If the goal is expensive, take it to the bank with them. Then watch the total grow online or via statements.
Enjoy – when you’ve saved enough, enjoy your family treat.
Praise – thank your child for helping make this happen!
“Hayley and Zac both wanted to see Disney’s Frozen 2 when it came out. We knew in advance when it would be in the cinema, so the two of them worked together to save half of the amount we would need for us all to go. I must say, I was impressed with their motivation. They even cut back on treats, asking if the money saved could go towards their goal.” – Paul
Find out more about savings in our Saving for your children and Savings accounts for children guides.
Give them opportunities to save
There are lots of fun ways you can help children enjoy saving:
- They’re ready to understand the concept of helping out around the house for money.
- Swap stars or sticker rewards for pennies
- Have penny hunts – just like Easter egg hunts, but healthier!
Children learn by watching and listening
Five and six-year-olds learn a lot from watching and listening. Talk about money and show them how it’s used – at home and at the shops.
There are lots of everyday activities at home you can do to help them learn about money:
- Use role-play games to help your child experiment with making decisions about money in a fun and safe way. Games that are useful for teaching about money include:
shop – ask them to role-play, including shop owner, customer and a parent.
house – ask them to pretend to be you, paying for shopping, bills, and things that they ask for.
party planner – give them a sum of money, add price labels to toy food and drink (or print some pictures from the computer), and ask them to organise a party with the money they have. They will need to make sure that everyone has all they need, including children, adults and different dietary needs.
- If your child hears you talking about money to someone else, ask if they have any questions about what they heard.
- If someone is spending or saving money on TV or in a film, ask them questions about it.
- Explain how not everything costs money, such as playing in the park or going to the library or a friend’s house. Ask them which free activities they enjoy.
- If your child is asking for things with pictures of TV characters, brands or celebrities on them, talk about why. Show them cheaper alternatives to see if they can explain what makes their first choice better. Using real money, show them what they could save by buying the cheaper alternative and ask what they might do with that saving.
At the shops
Shopping trips help show them spending and saving.
Before you go shopping
Try these ideas to involve them in preparing to shop:
- Many 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 (such as food for dinner) versus wants (like treats).
- Talk about the value of money — what can £1 buy? £5? £10?
- Set a budget for a part of your food shopping that your child has an active interest in. For example, things for their school packed lunch, or foods they enjoy.
“Shopping has become one big game for Rohan as he waits to see what choices I will put in front of him. He has even started giving me choices. This is great because it means I get lots of opportunities to explain why I am making certain money-related decisions.” – Harvinder
As you shop
Help them get used to making decisions about what to spend money on:
- Show them that some packages are bright and colourful and cost more, while others might be dull and less fun — but what’s inside is often the same and can cost less.
- 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 five bananas or a large punnet of grapes and three bananas.
- Allow them to choose different elements of a picnic lunch with a price limit.
Developing willpower and learning to wait
It’s normal for five and six-year-olds to want things they see. They’re starting to learn the difference between needs and wants, but still don’t fully understand it.
In fact, many children may pester more at this age. You can use these ‘wants’ to teach them the skills of saving, negotiation and that, no, sometimes they can’t have what they want.
Here are some tips:
Plan – if you’re going to a toy shop, plan ahead. Explain beforehand what you’re buying and why.
Listen – allow them to feel heard by giving them a list of things they can’t have now but might want for birthdays or holidays.
Explain – instead of just saying no; explain why. Explaining that we have money for what we need (such as food and heating) but not wants or treats helps them understand the choices adults must make about money.
Stick to your word – saying no and sticking to it helps them learn self-control, understand the difference between needs and wants, and to save for what they want.
More money-management activities
All children develop at different times. For example, some five and six-year-olds would respond better to some of the activities we recommend in our for How to talk to three and four-year-olds about money or How to talk to seven and eight-year-olds about money. Simply choose the ones you feel are the most suitable.
For more ideas for all age groups, download our Talk, Learn, Do guideopens in new window (also available in Welsh).
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