7 Easy Money Lessons To Teach Your Kids Now


Lifestyle writer Rae Ritchie asks six parents for the healthy money lessons they’re teaching their children.

Did you know that we form money habits by the age of 5? Which means it’s as important to teach your kids about the fundamentals of finance as it is to teach them how to tie their shoe laces, tell the time or brush their teeth.

With this is mind, we ask seven money-smart parents for their advice on teaching children how to be financially healthy.

1. Start young

Introduce money lessons using real-life scenarios and your kids will start learning earlier than you think, says former Which? Money writer, Laura Starkey. “Our eldest is 5, so he’s able to read price labels and think about how he might want to spend a toyshop voucher. Even our youngest, at 2-years-old, is beginning to understand opportunity cost. We give her choices, where one option closes off another. Then, she has to weigh up what’s important to her in much the same way as I might have to decide between a new moisturiser and a pair of shoes.”

2. Set a savings goal

Research published by the Money Advice Service shows that 70% of children save at least part of their pocket money. To help them get into the habit of squirrelling away cash for a rainy day, take a leaf out of money saving blogger Amanda Grossman’s book and encourage kids to set smaller goals. “I’ll encourage my son to write a list of what he wants to buy and whittle it down to one goal that takes the least amount of time to achieve. That way, he’ll get a quick win, and will be more likely to come back to goal-setting again and again.”

3. Connect earning with spending

Helping children to understand the value of money and where it comes from is essential to good financial health. “I am very open and honest with my children about money; they know what I earn and what that money pays for,” says personal finance expert Lynn James, AKA Mrs Mummypenny. “They also know how much work mum has to do to pay for football boots or a family holiday, which teaches them to appreciate things in life more.”

4. Differentiate between luxury and necessity

Family budgeting blogger Hollie Gregersen teaches her kids the value of money by highlighting the difference between essential and inessential costs. “I make sure we have lots of free days out at the park, beach or woods. This is so they know that money isn’t needed to have fun but is required to sustain them. Similarly, if we take a packed lunch with us, they know that I had to buy the ingredients for it. Both are valuable money lessons”

5. Involve them in decision-making

Sometimes, the only way children will learn the value of money is involving them in the decisions that directly affect them. Cass Bailey, author of the Frugal Family blog involves her children in family budgeting decisions. “For example, we have a set budget for ‘summer holiday’ spending. They can choose to spend on a one or two big days out or more, smaller days out and treats.”

6. Break the taboo

Being honest – even when times are tough – can set your children up for the better. Ricky Willis, founder of Skint Dad found that opening up with his children when they were struggling with bills meant they could learn some valuable lessons. “My children saw me getting upset and stressed without knowing why,” says Ricky. “I didn’t want them to make the same mistakes that I made, so I now go through the bills with my eldest Daniella and she helps us enter figures onto the household spreadsheet. I also explain to her which debts are priority. It’s not about scaremongering – instead she knows we are actively managing and controlling our finances.”

7. Introduce tools they’ll use as adults

When the time is right, think about getting older children a ‘proper’ bank account (fully functioning debit cards aren’t usually issued to children under 11). “For us, that moment came when our daughter felt confident going on her own to meet her friends in our local town or for a shopping trip further afield,” says minimalist blogger Catherine Gordon. “Once your teen has their own account, they enjoy a sense of independence. More importantly, they take responsibility for managing what’s in the account and budgeting for what they want to buy.”

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