How to teach your children about money

If you’ve been looking after children during lockdown, you may be thanking the heavens above that schools will be reopening soon so that the teachers can get on with educating your kids rather than you. 

But even if you don’t have to grapple with trigonometry or the English Civil War anymore, it’s still important to keep on educating your children (even the tiny ones) about personal finance when they go back to school.

A recent study by Cambridge University has found that children’s money habits are set from as early as age seven. Also, according to research from Experian, parents are the single biggest influence on children’s attitudes towards money, although more than half of parents say they lack the confidence or knowledge to teach money management.

Fear not, though. It doesn’t take a lot to get children on the road to sensible saving, spending, earning and investing. Here are some easy ways to help your children at various stages of their lives, to learn about money management.

Little ones

What is money and where does it come from? Many small children think that money just comes out of a hole in the wall, like magic. If they see you take cash out of an ATM or pay for something with a card, explain to them occasionally that the money is coming out of your bank account and that you will have to put more in to top it up later.

Teach them the numbers. There is a correlation between how good we are at maths and how good we are at managing our money. Help your little ones understand numbers as early as possible with number games, toys and even songs!

Play shops. Most small children like to play shops or run pretend cafes, so play it with them with real prices on items. Make some things more expensive than others and let them have a go at counting out pretend coins. 

Primary school

Coins and notes. Pay for things in cash occasionally and let them count the change. Go through the different notes and coins with them so that they get to recognise the denominations.

Shopping. Get them to help with the shopping by finding the best value versions of some products. They could even keep some of the savings as their reward.

Pocket money. Start to give your children a little pocket money each week from the age of five or six. Let them know what it’s for – maybe just for sweets, ice-creams and fun things.

A piggy bank and a real bank. Get your child to learn to save by giving them an actual piggy bank of some sort to save coins in. Also set up a savings account for them where birthday and Christmas money goes, together with any money they don’t spend from their pocket money.

Get into apps. Kids also need to understand digital money. Try one of the apps aimed at children and parents like Rooster, a virtual budgeting app which enables children to have a savings and a wallet account in one. It’s suitable for four-year-olds upwards. There are also other money apps aimed at children such as Osper, goHenry and Nimbl which allow parents to open online accounts for their children which are controlled via smartphones. These are proper digital current accounts which parents must pay a monthly fee for. 

Chores for money. It’s important for children to contribute to family life by doing daily chores, but you can add on some extra chores which they can do for payment and learn that money is earned. You can use the GoHenry app to pay them digitally. Children do jobs at home and the parent is sent a note about it via the app so they can get paid for completing the task. 


Give them an allowance. Pretend that the pocket money, or allowance, you give your teens is their ‘salary’ and that they can save or spend it as an adult would. You could even charge them a bit of ‘interest’ if they want to borrow more. This gets them used to earning and budgeting for themselves.

Comparison sites. Challenge your teens to use price comparison sites to get a better deal on household bills. Include some sort of incentive to make them do it (maybe 10% of savings goes into their bank account).

Compound interest. Don’t let your teens underestimate what they learn in maths about compound interest. Explain to them why it is (according to Einstein) ‘the eighth wonder of the world’ by showing them how it could make them rich long-term.

A Saturday job and more. Encourage your teen, as early as possible, to get a Saturday job and help them find one. It could be a paper round (though there are fewer of those now), washing up or waiting at a local tea shop or café or even babysitting and car-washing for local residents.

Students and after

Explain the cost of interest on their student loan. Students are getting savvier but many still don’t realise how much their student loan could cost them in the long-run. Explain how interest on a loan can mount up so that they understand it’s not free money.

Don’t pay their bills. Rather than paying their household bills while they’re at uni (or starting work in another town), give your student offspring a monthly allowance, if you can afford it, from which they have to pay their own bills, learning how to budget and finding the best value utilities.

Money-earners. Universities now often provide ways in which some students can earn money but it’s even better if you can help them to find temporary work in the holidays and part-time work during term-time. Working in pubs, cafes and shops is particularly popular but there are also other opportunities like taking part in online and offline focus groups, doing psychology tests in the university and tutoring.

And finally…if your child is about to turn 18 and has a Child Trust Fund account, hunt for the paperwork as it will be maturing as they start to come of age this year.  That should be a good start to their savings journey!

Get more tips and ideas for making and saving money by following Jasmine on Twitter at @Jasmine and on Instagram at @JasmineBirtles

The views expressed here belong to the author and do not represent those of Funding Circle. Funding Circle is not authorised to, and does not, provide investment, tax, legal or regulatory advice. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, such information contained here. If you have any questions, please speak to your professional adviser or seek independent specialist advice.


Jasmine Birtles