Budgeting, spending and savings are some of the most invaluable life lessons we can learn, and the earlier we’re educated on them the better. Children learn from parents, grandparents and caregivers, so it’s important to demonstrate good practise from an early age.

Research  shows that by the age of seven, children’s attitudes about money are well developed, and 91% of children and teenagers aged 7-17 years old will turn to their parents for financial advice.

Educating children on healthy money habits and how to manage their finances has numerous benefits. It can build their confidence and understanding of how money works, preparing them for adulthood, and in turn may also encourage you to review your money habits to ensure you’re setting the best example.

Money Helper, a UK Government run organisation, advises a good age to start teaching your children or grandchildren about money is between three and four years old because a child typically begins to build attitudes around money from the age of five. We’ve collated some of our favourite ways to introduce ‘money-talk’ into your conversations, but before you start it might be worth asking yourself:   

• What healthy financial habits do you possess?
• What habits can I improve?
• How do I want my children/grandchildren to view money as they get older?

Three to six years

Children around the age of three can begin to understand the concept of money, and their curiosity grows so it’s a great time to start showing them money so they can recognise the numbers, colours and different shapes of coins.

By the age of six years, most children understand coins have different values, they begin to ask questions about money and recognise emotions are involved with having or losing money.

Their first piggy bank

Buying them their first piggy bank teaches the importance of keep money stored in a safe place. You can give them a few 1p coins to put in their piggy bank and count along with them and as their confidence and learnings grow you can increase the value of coins and move onto 2p, 5p, 10p, etc.

Watch and learn 

There are great resources online and TV that teaches children to count and to enjoy learning about numbers, you’ll find great programmes, such as Numberblocks, on CBeebies and YouTube. You can also introduce games which include money into your day-to-day play. Playing ‘Shops’ is a great way to show children that we exchange money for everyday items. As they grow you can start to introduce more realistic values to the products you’re playing with, showing them that a bag of apples costs less than a birthday cake. Be sure to keep the conversation flowing throughout playtime to help them better understand. At this age they can also join you and help with the weekly shop, scanning items and helping you to pay at the checkout.

Developing patience

As they grow older and reach the ages of five and six, you can begin to teach them the value of waiting and developing willpower by introducing the practice of saving. Ask them to think about something that they would really like to buy, like a magazine, and help them to count the money in their piggy bank. If they haven’t quite got enough, give them a realistic time frame as to when they will have saved up enough to buy it, and keep encouraging them to add any pocket money or gifts into their piggy bank to help them get to their goal more quickly.

Seven to twelve years

Between the ages of seven to twelve, children develop significantly and conversations about money become more commonplace. This is the age where children can start to show a greater awareness around money, so ensure you’re having regular conversations to eliminate any anxiety and to help them feel more confident.

At seven and eight most children understand that not all things need to be purchased via cash so it’s a great time to simply explain the concept of debit and credit cards. Talk to them about how this relates to the money in the bank, and how every time you tap your card, money is taken from your bank account.

As they grow older to pre-teens, children face more challenges like peer pressure and materialism, and hold more financial responsibility as they move to secondary school. Here are some of the ways you can support them through these changes:

Earning pocket money

Now is a good time to start teaching children that money can be earnt. Begin to give your children or grandchildren chores like doing the dishes, dusting, tidying, and cleaning their room, etc. Once these chores are completed, they will receive their pocket money. You can also add extra earning opportunities to help them ‘top up’ their pocket money if they are saving for something.

Resisting peer pressure

A lot of children believe that to fit in they must have what their friends have. Use this as an opportunity to teach them about self-discipline and spending, and to teach them that we are all different, with different wants, needs and financial situations. Don’t be afraid to get into the tougher conversations here; some people have lots of money, and others don’t – and that’s ok. What is important is that we are mindful about how we spend the money we have, and how we prioritise our ‘wants’ in a realistic way.

A savings challenge

There will be many occasions where your child or grandchild approaches you asking for a new toy or the latest gadget. This is perfect timing to apply the learnings of patience and create a savings challenge, they can use the pocket money they’ve earned from their chores.

Now you can create a simple budget and a savings goal for that toy or gadget.

Teenagers

As we all know, teenage years can be a little bumpy and talking about finance may be the last thing on your child’s mind, but there are plenty of significant opportunities to educate them about money.

As they gain more independence and responsibility, for example taking their first job, starting to learn to drive and going out and socialising independently, the temptation to spend frivolously and not save will increase.  

Bank on it

If you haven’t already, now is the time to help them to open their first bank account. Transition from using physical cash to using a debit card and teaching them how to add to and manage their account. As well as a current account, they should be encouraged to open a separate savings account and you can educate them on how interest works.

Their first job

Once they receive their first ever payslip you can show them how to budget this and divide up how much they can afford to spend and save each month, whilst still having money to enjoy.

Financial responsibility

Teenagers crave financial independence – and now is a great time for them to learn about paying bills (and the repercussions of not paying them!). Whilst they are still at home, allow them to be responsible for paying for an extra-curricular activity that they enjoy, or if they’re a bit older, to have and pay for their own phone contract. Bigger financial payments will enable them to get comfortable and confident with regular adult financial responsibilities. This will help them to understand what ‘paying bills’ looks like and will help to set them up for when they fly the nest and go off to university or move out and start to work.

For further advice on how to talk to children about money visit Money Helper.