Five ‘vital’ cash classes mother and father want to show their youngsters
Money makes the world go round – that is why children need to understand it as soon as possible
Kids should be learning these lessons at home, not just in schools(Image: Getty)
Experts have said that kids who learn life lessons about money early on are often better at saving and more confident managing their own cash. But, parents have been told that the best education comes from home as well as school.
In November last year, the Government confirmed that financial literacy would become a key part of the national curriculum in England for both primary and secondary schools from September 2028. Pupils in Scotland, Wales and Northern Ireland tend to have financial education built into their current maths or social studies lessons.
No matter what kids learn about money at school, they need to become more familiar with it at home, according to financial experts. Louise Hill, founder of prepaid debit card and financial education app for young people GoHenry, said: “It’s so important to let kids get hands-on with money and build up their skills at home from an early age, as research shows that money habits are already formed by the age of seven.
“Approaching these topics might seem a bit daunting, but the truth is, early money lessons don’t need to be serious or formal – it’s actually quite easy to turn them into a bit of fun.” Rajan Lakhani, head of money at the personal finance app Plum, added: “Teaching kids about the value of money as soon as possible is very important.
“The habits, attitudes and understanding they develop from a young age can have a big influence on how they approach money matters in adulthood.” These are the things the experts say children need to understand about money…
The value of money
Young children can learn about the value of money through fun role play, like setting up a play shop, says Lakhani. He suggests displaying toys and pretend groceries, and using coins labelled with different values, and then taking turns playing shopkeeper and customer.
He played this with his daughter, and said: “The pretend transactions helped her see that our weekly groceries didn’t come for free and how to not overspend, as well as helping her improve her basic addition and subtraction skills.” This is linked to showing them that shopping costs money, as with the rise of contactless payments and online banking, it’s harder for kids to see how money works, where it comes from and that things cost money.
The difference between needs and wants
The experts say this is one of the most important money skills, and there are lots of simple ways to introduce it to children. One of the best ways is by weaving money lessons into daily life, says Hill.
Instead of leaving them at home, perhaps let the kids lead the next weekly food shop. She said: “Set them a budget and challenge them to stick to it.
“This will help them understand what the essentials are and why you can’t always have that extra treat or a new toy. If it’s something they really want, it’s time to start building up their savings pot.”
The benefits of saving
Understanding the difference between needs and wants can help teach about saving. It’s a concept that can be difficult to understand, especially for younger kids, so Lakhani suggests using practical examples to help.
He said his eldest daughter had some birthday money and found a toy she wanted to buy, but realised she “only wanted it so she could spend the money” and used this chance to explain how she could “grow her money like mummy and daddy”.
With saving, her £15 was eventually £20 and she could buy a toy she really wanted, helping her associate saving with goal-setting. Lakhani said: “It’s teaching them about delayed gratification and why saving is a good thing.”
The connection between hard work and earning
Hill suggests focusing on simple everyday things, like earning and budgeting, with the help of children’s pocket money. She said: “Pocket money is one of the simplest – yet most effective – places to start.
“It isn’t about how much you give, it’s just about being consistent, and that’s what helps kids build up good money habits, which they’ll take with them into adulthood.”
She suggests linking pocket money to chores, such as tidying their bedroom, can help teach kids the connection between hard work and earning. Hill said: “It helps them understand that money has to be earned and doesn’t just magically appear online, on a bank card or at an ATM.”
How to keep money safe
The best way to help children learn this money lesson initially is to give them a piggy bank to store their money. This can be replaced by a bank account as they get older and have more money.
It’s important that a piggy bank or savings jar is transparent so you and the child can see the money growing, Lakhani said.
“Giving a child a piggy bank gives them a safe place to store their money, and parents an opportunity to talk about why it’s important to keep money safe. Having that clear view is essential. You can then congratulate them for their success in building their money pot.”
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