For parents, guardians and even grandparents, a significant part of their roles in raising children is teaching them several important & valuable life lessons. These range from eating their fruits & veg, being kind to people and learning from their mistakes to name a few. Ultimately, the goal is that these lessons will create a strong foundation for children to build on as they grow up to lead independent & responsible adult lives.
Despite this, there is one extremely important topic which affects everyone, playing a pivotal role in all our lives but is still commonly not discussed with children. In some cases, it is completely ignored, and this is the topic of financial literacy.
There are several reasons why financial literacy is often not taught or discussed with children. Some adults believe it's something children will naturally learn as they grow older, while others assume it will be covered in the national curriculum. Additionally, many simply lack the confidence in their own financial knowledge to effectively teach or talk about it with children. Whatever it may be, it is imperative that one of the lessons to teach children is financial literacy due to the significant role it plays in society & how it affects key decisions we make every single day. Research from the University of Cambridge shows that money habits are set by the age of seven, meaning that parents have the ultimate role to play in ensuring that children develop strong financial literacy skills at home through various creative & engaging ways. Here are 7 ways that you can start teaching children about money:
1. Talk to children about money & how the financial system works
This is a simple but effective way to help your children understand financial concepts. Explain basics like where money comes from, how you earn or borrow money, and explain how banks, financial institutions & the government all play an important role in the financial system. For older children, show them your payslip and explain deductions made from your gross pay and what they might be used for. Additionally, you can explain how you manage & budget your money, and how you make your financial decisions.
2. Set up a chores/pocket money system
A valuable way to teach children about earning their own money is through completing chores in the home. Introduce a system of a cash reward for helping around the home, which helps children understand the concept of earning money and that you must work to earn money.
3. Explain the difference between wants & needs
One of the most important lessons in financial education for kids is helping them understand the difference between wants and needs. It’s all about showing them that things like food, clothes, and a place to live are needs - things we can't do without. On the other hand, toys, video games, and snacks are wants. They’re fun to have, but not essential. This kind of lesson is a great way to show kids how to make smart spending choices and focus on what truly matters. They’ll learn to prioritise their needs first and then decide what to do with any leftover money. That could mean saving it or choosing to spend on something they’d like to have. It also introduces the idea of delayed gratification, helping them understand that they won’t always be able to get everything they want right away and that’s perfectly okay.
4. Explain savings & set a savings target together
If your child receives pocket money or an allowance, explain what savings are and create a savings challenge that will encourage them to adopt good saving habits early. This is a good opportunity to introduce ideas around keeping their money safe and planning for future spending, such as a new game or a day out with their friends.
5. Involve them in real-life spending decisions
Another way to teach your children about finances is to get them involved in some real-life spending decisions. A quick and easy way to do this is to create a shopping list with a target budget and take them along with you on your next grocery run. Once in the supermarket, ask your children to select the products based on your shopping list, adding the prices up as you go along, challenging them to stay within your budget and finding ways to save money. Something this simple can help children to understand more about managing their money in a real way.
6. Open a bank account
Opening a bank account for your children is an important step in starting their financial independence journey. With several banks now offering products specifically aimed at children, this will give your children experience & freedom of managing their money as they will be able to access their accounts online or through an app, giving them an early sense of what it’s like to own their own bank account.
7. Play fun educational games focused on financial literacy.
Introduce them to core financial concepts such as savings, earning & spending and tax through fun & educational games such as our financial education jigsaw puzzles. We believe the best learning happens when children are having fun — and yes, that includes turning financial education into a game. Our financial education jigsaw puzzles will build problem-solving skills, help kids see the bigger picture, and spark meaningful conversations about money.