Talking to children about money

Managing money is an important life skill. Talking to your children about money and giving them some responsibility from an early age helps them long term. This means they are more likely to be financially stable adults.

Role play for very young children

You can start introducing children to the idea of what money is before they start school. They won’t be able to understand the concept of finances in the same way as older children and adults. But playing games can help them build an understanding.

You could try:

  • Coin rubbing. This can help children to recognise different coins by their shape or size.
  • Playing shop. Use stones or marbles to represent paying for things.
  • Painting a piggy bank. Use this as a chance to explain that money is something that should be kept safe.

As they get older, talk to your child about how you pay for things when you’re out and about.

Pocket money

Some parents start giving their children pocket money when they are in primary school. This is one way to help children learn how to take responsibility for their own money.

The amount of pocket money you give to your child is up to you. There is no correct amount. The important thing is that it helps your child to understand the concept of managing their own money.

Cash or card?

Many banks now offer children’s bank cards for managing pocket money. You can also give your children pocket money in cash. Again, it’s up to you which approach you take.

Using cash means that children have something they can physically hold and count, which can help them understand money better. However, cash is becoming less common. If you rarely use cash yourself, you might need to get some specially.

A kid’s bank card can help to teach your child how debit card payments work. Many children’s bank cards also come with an app so they can see how much pocket money they have, and keep track of where their money is going. However, some banks charge for these cards.

It’s a good idea for children to have some kind of bank account by the time they are a teenager. This helps them to specifically learn how accounts work.

Earning pocket money

As your children grow older, they should be learning to take responsibility around the house. This is an important part of teaching them life skills. Some parents ask children to earn their pocket money by doing extra things around the house, like washing the car or cleaning the windows. You could also give them extra pocket money as a reward for working hard at something.

Always make sure you use pocket money as a reward, rather than as a bribe.

Budgeting and saving

Explain to your child that:

  • Different things cost different amounts of money.
  • You can’t spend more money than you have.
  • Putting small amounts of money aside now helps you afford more expensive things later.

For young children, use role play to show things costing different amounts in a toy shop or café. Star charts can introduce the concept of saving.

As your child starts to learn about numbers and adding up, try looking at receipts together to show how much different items cost.

Ask older children to help keep an online grocery order within a certain budget.

Wants v needs

Explain the difference between needing something and wanting something. Help them create a system of dividing their money into things they need now and things they want now. Encourage them to save for something that costs more than they have. As they get older, explain how to save for unexpected costs.

Hidden costs

For older children and teenagers, explain about hidden costs for things like:

  • Going over their data allowance on their phone.
  • Forgetting to cancel a free trial.
  • Using a lot of electricity.

Read more about the hidden costs in online gaming.

Learning through mistakes

Let your children make small, age-appropriate mistakes with money. Research shows this can stop them making bigger mistakes when they are older.

For example, they might spend all their pocket money on sweets and find out they don’t like them, or use their first pay packet for a new outfit and have nothing left for a night out.

Role modelling

Children learn by watching what you do. Speak to your children about how you manage your money and let them see you make sensible decisions.

For example:

  • Explain how you’re saving up for something you want, like a family holiday.
  • Talk to them about the things you’re buying in the supermarket – for example if you’re buying a cheaper brand or taking advantage of offers.
  • Show them how you pay your bills or top up prepayment cards.

If you are under a lot of financial pressure, it can be hard to teach children about money without passing your stress on to them. But avoiding discussing money at all can often make things worse. Show them what support you’re getting, and find time for family bonding activities where you’re not talking about money.

Peer pressure

As children get older, they can start to compare what they have to what their friends have, or be taken in by advertising. This can be particularly hard if you’re worried about money.

Remember that children will make these comparisons regardless of how much money you have. Explain that every family is different and has different needs and wants.

If there’s something specific your child wants, explain how they could start to save up for it themselves.

Earning money outside the home

Working outside the home helps some teenagers to build responsibility for their own money. It also gives them something extra for things that they want to buy.

  • Children aged 13 to 16 are legally allowed to get paid work. There are limits on the kinds of work they can do, and how many hours they can work.
  • Young people in England aged 16 or 17 can start to work more hours, either outside of school/college or as part of an apprenticeship.
  • In Scotland, Wales, and Northern Ireland, children can legally leave school and work full time from age 16.

If your child doesn’t already have a bank account, they will need one when they get a job.

Managing wages is a new challenge. Talking to children about money from a young age will help them when they start earning their own money.

Young people with additional needs

If your child has additional needs, they might find it harder to manage their own bank account and might need more direct help.

Managing money for someone else – Scope

Get support

If you’re struggling with money and find it hard to talk to your children about this kind of thing, you can speak to one of our parenting coaches.

Our article on coping with money worries also has useful advice about making sure you’re getting the help you need.

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This advice was written by our experienced Parent Talk coaches. Parent Talk is a free online service for parents and carers, provided by the charity Action for Children. For more advice, message our parenting coaches with our online chat.

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