All parents want to set their children up for the best possible future - a key part of this is making sure they’re able to manage their own finances when they move out.
Just under two-thirds of parents agree that it’s important to teach kids money management skills (63%), and half of parents say this education is down to the parents (48%). However, it can be tricky to know the best way to teach your children about money and what’s appropriate for your children at each stage of their childhood.
If you want to kickstart your child’s financial education but are struggling to know where to start, read on for some tips and inspiration.
Children under 8 years old
Give your child a piggy bank
With almost half of parents giving their children a piggy bank, it’s the most common way parents teach their children about money (47%). Whilst your child might be too young to need pocket money, they’ll no doubt receive money from relatives for birthdays or Christmas that they can save in their piggy bank or money box. It’s an easy way to start teaching your child how to save money and it gives them a sense of independence.
Introduce money-related role-playing games
Children under eight years old won’t be able to head to the shops themselves, but you can introduce the idea of paying for things and the value of money. Role-playing games like ‘shops’ are a great way to teach children to add up money and start to learn how much basic items cost.
Children aged 8 to 14 years old
Give your child pocket money and teach them how to budget it
A whopping 80% of UK parents’ give their children pocket money, according to VoucherCodes’ recent survey, with the average amount sitting at £18.50 each month. Pocket money is a great way to teach your children the value of money and how to budget, as they have a limited amount of cash they have to stick to. Your child will make mistakes and spend money on things they later regret, but by allowing them to make these mistakes they’ll learn how to budget better.
Pay your child for doing chores around the house
If you’re looking to introduce the idea of ‘earning money’ and give your child some responsibility, paying your child small amounts of money for simple household tasks can be a good solution. If you’d rather give them money in a lump sum, instead of by task, you can also get them to complete a list of chores in order to receive their monthly pocket money allowance.
Allow your child to make small purchases
If you’re heading to the local convenience store or are grabbing ice creams on holiday, why not let your child make the purchase? This way they can practice paying for items, counting the money, checking they have the correct change - all whilst building their confidence.
Talk to your children about video game costs
Almost one-fifth of parents say their child has accidentally spent money on virtual games or apps such as Fortnite or Roblox (17%). These popular games have in-app purchases and if your debit card is connected to the account, your child may accidentally spend your money without realising as virtual currencies, like Robux, and avatar accessories are purchased using actual money. Before setting your child up on these games, it’s important to explain to them how these purchases work and, where possible, set up restrictions on the account to prevent accidental payments.
Open a child’s bank account or pre-paid card
With most stores turning to card-only payments, it’s also important to teach your children how to use debit cards. There’s lots of banks and pre-paid card companies that offer children’s accounts which let them make small payments and give you control - you can see what your child is spending and set limits. Here’s just a few options:
- Monzo - Monzo for under 16s
- Natwest - Rooster Money
- GoHenry - Pre-paid debit cards for kids and teens
- Lloyds - Smart Start
As always with any bank account or financial product, make sure you read all the small print before signing up to check you’re going with the best option for you and your child.
Let them plan a family day out
To help teach your child about budgeting, give your child a budget and ask them to plan a family day out. It should include everything from activities, to lunch, even petrol costs to teach them how these extras can all add up and eat into the budget.
Children over 14 years old
Encourage your child to get a part-time job
Although it’s admittedly harder for many teens to find a part-time job than it used to be, with businesses increasingly looking for a little bit of experience, there’s still plenty of options out there. From tutoring younger students, to hospitality, to your local supermarket, part-time jobs are a great way to teach your child about responsibility and give them some independence, with them earning their own money to spend as they please.
Charge your kids rent or bills for them to pay out of their pocket money
This tip is slightly more controversial but is currently trending on TikTok with money-saving influencers, such as @budgetwithmilly, using the technique with their own children. It works by giving your child slightly more for their pocket money each month, for example £30, but then charging a small amount (£5) for rent, and a small amount (£5) for bills so they can learn to budget and understand future living expenses.
Speak to your children about investing, credit, and taxes
Once your child is older and approaching the age they’ll start working and earning, it’s time to teach them about more complicated financial products. Only around 10%-20% of parents say their secondary-school-aged children either completely understand or mostly understand these kinds of financial products, so it’s time to start making up this educational gap. These topics can be quite complicated so using real-life examples, or even your own family finances as an example, can help bring these things to life and make them easier to understand.
Encourage smart shopping habits
An easy way for anyone to stay on top of their budget is shopping smartly. A few smart shopping habits add up and can help you to save a lot of money whether shopping online or shopping at the supermarket. Here’s a few key tips to teach:
- Shopping around and comparing prices
- Checking the cost per gram in the supermarket
- Taking advantage of discount codes and sales
- Creating (and sticking to!) a shopping list
- Checking receipts and bills
- Watching out for ads and scams
For all ages
Take advantage of online resources and games
There’s lots of resources available online to teach your children about spending, budgeting and saving money. For example, BBC Bitesize has curated 10 cartoons, each designed to teach your child a different skill from gaming payment models, to the impact of influencers on spending. Likewise, Natwest offers 18 free games which teach children about financial literacy tailored to children between the ages of 5 and 18.
Practice loud budgeting
One of the best ways to teach your children about money is leading by example. By openly talking about how much you can afford that month, when and where your money is going, and your financial limits, your child will gain a better understanding of the cost of running a home and how to prioritise their spending. Whilst some parents (5%) avoid talking to their children about money, 44% of parents say they speak openly to their children about family finances.
According to our research, these parents are more likely to say their children know the value of money, and that they’re confident their children will be able to manage their own finances once they’ve left home.
You can find more ideas and resources here:
MoneyHelper
Mums Net
Natwest MoneySense
Looking for more tips on how to become a money-saving pro? Check out our blog post 'Five deal hunting mistakes UK shoppers make (and how to avoid them)'
