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Financial superkids: how to teach yours to be brilliant with money

When it comes to teaching our children about good manners and safety, most parents think that they’re doing a cracking job. Yet, when it comes to talking to our kids about cash, few of us know where to start.

Yet research from the Money Advice Service shows that we are the biggest influence on how our children will handle their finances in the future.

What’s the problem?

For some, the topic feels taboo due to being raised to believe that talking openly about money was rude.

While for others, money matters can be a blind spot for parents because many feel financially inept themselves.

What’s more, unlike other parts of parenthood, there isn’t any playground chatter about the topic, so we simply revert to doing what we know and pass our habits, both good and bad, down to our kids.

When it comes to money matters, one thing is clear, ignorance is not bliss and as the children of today are the consumers of tomorrow, teaching your kids to be financially savvy will benefit them for their whole lives.

Here is how to do it:

1. Just get started – the earlier the better

Children’s first step into money management begins with juggling weekly pocket money or deciding how to spend birthday money. It may seem insignificant but research by the government-backed Money Advice Service found that adult money habits are set by the age of seven. So, before children are even at junior school they’re heading towards being a ‘savvy spender’ or a ‘splashing-the-cash' type.

The challenge for parents at this age is knowing how to make any financial lessons age appropriate.

Chatting about compound interest with a four-year-old is not going to go very far but making money a regular family discussion is a good place to start.

An easy way to do this is during the weekly food shop where you can use the outing as an opportunity to talk about planning, saving and finding the best value. Let your children hold the list and lead the way or, if they’re older, give them a few items from the list to find on their own at the best price.

For children under 5, why not print off a picture list of a selection of items and have them tick off while you move around the supermarket. Not only does it help your pre-schooler get involved in the food shop, but it will keep them busy while you keep an eye on your budget.

" Research by the Money Advice Service found that adult money habits are set by the age of seven "

2. Chop down the money tree

If you want to teach your children about cash, it is crucial that you explain where it comes from and that when you work, you get paid.

But if you don’t work, the money will stop coming in.

The key is to demonstrate the relationship between work and money – it seems simple but is often forgotten by parents.

3. How to avoid saying ”we can’t afford it”

Though experts warn against telling your children that you can’t afford it, it’s easy to use this default response when your child has been hounding you for the latest Harry Potter merch for the last hour while you are struggling with an essential food shop.

But using this phrase gives the impression that you’re not in control of your finances, which can be scary for kids – and create future money anxieties. Instead, say “We choose not to spend our money on that right now.”

4. Pay your kids pocket money

Forking out a weekly allowance can be a divisive topic among parents.

Some argue that financial rewards are a good way to get kids to help around the house.

While others say that helping with chores is simply a part of being a family and should not have to be paid for.

However, another way to look at it is that providing your kids with pocket money is one of the best ways for them to learn how to handle money on their own – so long as it is used appropriately.

But when is a good age to start? Experts suggest that starting with a weekly amount when your child enters infant school and then spacing out the timing to fortnightly or monthly by the time that they are finishing secondary school is most appropriate.

Decreasing the frequency of payments will be a great lesson that will set them up well for adulthood and a monthly salary.

Also, don’t let your child ringfence their pocket money for treats and toys, it should be issued with the understanding that some of the cash can be on fun stuff, a portion of it must go towards covering needs.

How much should you be paying out? It’s a personal choice, but figures from Childwise show that kids are now getting £11 in pocket money per week.

What’s more, it seems that the gender pay gap starts even earlier than we thought. According to the research, boys receive £12.50 per week on average, while girls receive just £9.50. Yikes.

" Try not to let your child ringfence their pocket money for treats and toys "

5. Encourage saving with birthday and pocket money

It is crucial that you show your children that money can play a variety of roles in their daily living whether it is spending today or saving for tomorrow.

Providing pocket money in lower denominations makes it easier to allocate a proportion of your child’s income to these different goals.

By encouraging saving, children experience the positive emotions – particularly satisfaction – connected with saving money.

For younger kids, labelled jars work to separate the money – one for saving, one for spending, and one for sharing with those who are in need.

Anytime they make money by doing chores or receiving birthday money, encourage your child to divide the cash equally among their three jars.

It’s not a huge act, but it does start the process at a young age that it’s okay to spend some of your money, if you’re giving back to others and saving as well.

Once they’re older, you can set them up with bank accounts that mirror the split.

6. Explain the difference between needs and wants

It is only natural that kids want the latest toys and gadgets, but making them understand the difference between needs, wants and wishes will help them make sensible spending decisions from a very young age.

One way to do this is to put it into a context that your child can understand – for instance, explain how many weeks of their pocket money it would cost to pay for the item.

7. Make cash king

One of the best ways for children to see money in action is when you make transactions with cash – whether it is at the shops or through giving pocket money.

It’s only once they have grasped ‘real’ money can you move on to the more difficult concept of virtual or digital money.

According to the Bank of England, cash withdrawals from ATMs were down by 40% at the end of last year.

However, when shopping with younger kids, you can try to make a concentrated effort to pay with notes and coins where possible (and Covid-safe) as this can be a valuable lesson.

8. Let them make mistakes... and learn from them

As hard as it can be to stand back and let your child control their own cash, there is value in doing it.

If things go wrong, resist the urge to sort it out. Dealing with the consequences of their actions will encourage your child to learn to make smarter financial decisions.

Don’t forget that while you may think that this article is brilliant, it is intended for information purposes only and should not be mistaken for financial advice or recommendations.

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To a kid, being told to save - without explaining why - may seem pointless. Help them set a fun savings goal to help them focus.


Part of being a better saver means knowing where your money is going. If your kids get pocket money, have them record when they spend it so that they can see where their cash is going and how fast it disappears.


Just like adults want to be rewarded for saving with interest, kids are motivated by incentives. So, if your child has set a big savings goal - a new games console, for instance - you could offer to match a percentage of what they have squirrelled away once they hit their target.

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