Children who are better with money tend to have learnt these skills from their parents or carers. Giving your child the opportunity to spend and save from an early age allows them to develop the skills they need to make good choices about money now and in the future.
As a parent or carer, you are the most important influence on your child’s attitude to money. And you can help them to learn the essential skills they’ll use to manage money throughout their lives.
We’ll show you how to help 3 to 11 year olds understand:
- where money comes from and what you use it for
- how to make good choices and learn from their mistakes
- the benefits of saving
- how to make choices about what to buy with the money they have
- the difference between wants and needs.
Supporting your child to build a healthy relationship with money doesn’t happen overnight. Talking openly and practising in real life will help your child to pick up the skills they need.
Talking to children about money can be difficult
It’s never too early to talk money
We want our children to grow up feeling confident about managing money. However, it’s often difficult to talk about money – it can be an emotional topic, especially if you have had your own issues with it or feel you would say the wrong thing.
You may feel that money discussions are better left until your child is older. But this can stop them from developing the skills they need to look after their money in the long term.
It’s easier than you think
The good news is you don’t have to manage your own money perfectly to be able to teach your children good habits. You just need to decide what you want to teach them and keep it simple.
Little and often is the best approach. Doing fun activities together also helps them to learn through real-life experiences. Making these conversations and activities a part of daily life will teach your children the skills they need.
Start when your child is still young
Our habits around money can start to form from around the age of seven. This includes whether you spend money straight away or like to save up. Children learn not just from what you tell them but from what they see you doing, so starting early helps to build good habits.
There’s no reason not to talk to your kids about money from as young as three years old.
This will help them:
- Get the practice they need – learning how to manage money doesn’t happen overnight. Children need to build up their knowledge over time. They learn by taking lots of small steps and having opportunities to use money in real life.
- Learn from their mistakes – this helps them to understand the consequences of the decisions they make. For example, if they spend all their money on sweets and can’t afford a new toy, they’re learning reasons to save but in a situation where the stakes are low.
- Avoid money problems in the future – if you only start managing money when you’re an adult, the decisions you need to make usually involve bigger sums of money so the consequences of mistakes can be more severe.
You have the most influence on your child’s attitude to money
You play the most important role in helping your child develop the skills they need to manage money. If they see you make money decisions, they’re more likely to come to you with their questions.
Your child will also be influenced by other people in their lives who may deal with money in a different way to you, for example, grandparents or friends at school. Or they may see adverts or content on social media that could influence their attitude to money. This is a great opportunity to encourage your child to think about why people make different decisions about money.
What is money?
Here’s an exercise to help you understand how children see money:
- Imagine an alien is visiting earth for the first time.
- What would they think money is for?
- How would they think it is used?
As an adult you know exactly what is happening. Children (like the alien) don’t understand what money is and how it is used unless it is explained to them.
A little bit of preparation goes a long way
It can be hard to know how to start a conversation about money, so it’s worth thinking about what you want to teach your child. This doesn’t have to be complicated — you could just decide the basic points you’d like to get across and the values or attitudes towards money you think are important to share.
It’s also worth identifying what’s important to your family right now — it’s much more interesting for children to get involved in money decisions that affect them directly. For example, if you are saving up for a holiday you could show them some of things you’re cutting back on such as meals out or trips to the cinema.