Children’s attitudes and habits around money form earlier than you may think. Research shows that by age 7, they’re already developed. That’s why it’s 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.
You don’t have to be an expert to teach your children about money. There are simple things that you can do at home or when you go out to start a conversation about money. If you find it hard to talk about money, as many people do, try using these ideas and activities to help you get started.
How does taking about money affect children?
Some parents are concerned about exposing their children to worries about money. 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.
Explaining what you are doing when you’re managing money, and involving children in family spending decisions reduces confusion for children. Talking about money can reduce stress for parents as well, because it helps children to understand better why you might say no to some spending requests.
What can children understand about money at this age?
Things children can understand include:
- simple calculations based on exchange rates
- different currencies are used in other countries
- how to plan and manage a basic budget, and keep track of spending
- how to check basic financial information e.g. receipts, bills, bank statements
- how advertising is used to persuade you to spend money
- how to compare prices and decide what is best value for money
- there are risks associated with spending money online e.g. scams and phishing
- what interest is
- the benefits of saving and can explain some of the risks involved in borrowing money.
Will 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.
This is a great age for learning, particularly as your children will soon be going to secondary school and may be making more money choices on their own. Many secondary schools use cards for payment. Children will need to understand how these work, and how to choose what to buy every day.
There are ways to raise a conversation about money as part of day-to-day life. For example, talk about bills and where money goes. Explain about ways to pay for things, including direct debits, monthly bills, topping up your meter and so on.
Money and mobile phones
Around this age children may start asking for a mobile phone. If you decide they can have one, you can use it as an opportunity to talk about money and phones. It’s also a good time to ask your children questions and set up family rules if they get a mobile phone: How much do phones cost? What is a contract and how does it work? How does it compare to ‘pay as you go’? What does it cost each month? What if they use up all their credit? What happens if they lose the phone?
Make a budget
A budget, or money plan, also helps with looking after money. Explain what you spend money on and how you make decisions on what to spend. Children can start to keep track of their own spending, which will be a useful skill in the future. Have them write down any money they get, how much and what they spend it on. Decide what happens if they go over their budget limit.
Children can understand more about borrowing money at this age. Explain that when you borrow money you pay interest, meaning that you pay back more than what you borrow. You can talk about being careful with credit and what problems there might be if you can’t pay it back.
The weekly shop or shopping online are a good opportunities to talk about money. Have your children help you to find the best price by comparing prices in stores or online.
Talk about their friends and money. What are their friends talking about buying? Why do they want some brands more than others? Do brands make products better?
Use this activity to help your children learn to save money.
Work out their ‘income’
Consider your child’s sources of money, which could include what they earn from doing chores, or even the amount that you or your family spend on treats for them, which could be used as savings.
Work out how long to save, and what for
Think about how well your child understands the need to wait for things, and estimate what period of time they could successfully save for.
Think about something your child has repeatedly asked for but hasn’t been able to have due to cost. Consider whether this is something that they can save for.
Help your child to decide what they are going to save for and how they are going to do it. Make sure they understand what they will be going without (for example, money from chores and/or treats) and for how long. Remember that for them, three months might seem like a lifetime!
Create practical support
Support your child by creating practical reminders:
- a money box with a picture of the item they are saving for
- a wall chart to enable them to monitor their progress
- celebrate and count down along the journey: halfway there, 2 weeks to go.
If your child is finding saving tough, try giving them a free treat or planning a defined break from saving. Avoid letting another family member or friend just buy them the item.
When your child succeeds, make buying the item a special event!
Key money messages
Children can learn valuable ideas from the saving challenge that will help them as adults:
- saving allows us to have things that we wouldn’t be able to afford if we always spend money as soon as we get it
- saving brings a sense of achievement, and the item you save up for has special value
- planning to save for something along with someone else makes goals easier to achieve.
Pushing things further
If your children are doing well with saving challenge and you want to help them go further, once you’ve achieved one savings goal, set another one. Gradually increase the size of the goal and the length of time to achieve it, but make sure that it remains realistic. Help your children to think of ways they might be able to save more, perhaps by increasing their income by doing extra chores.
Choices that save money
At this age you can also explain to your children their personal power to make choices around money. You can explain that this could be choosing:
- to buy or not buy something
- to save money
- to buy less expensive brands
- to switch to a cheaper gas or electricity company
- to give our time rather than gifts that cost money
- not to buy something just because it is the latest version.
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.
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