Want your children to be financially literate? Here’s how to teach them to look after their finances.

In today’s fast-paced, consumer-driven world, teaching children how to manage money wisely is one of the most valuable life lessons we can offer. Financial literacy is more than just knowing how to count coins or open a savings account—it’s about building healthy money habits that will set the stage for lifelong success. The good news? It’s never too early (or too late) to start.

Why Teaching Financial Skills Matters

A growing body of research highlights the importance of financial education from a young age. According to a Cambridge University study, money habits begin to form by the age of 7. These early attitudes can influence how children handle money for the rest of their lives.

Meanwhile, research from the Money and Pensions Service (UK) shows that children who are involved in financial decisions at home are more likely to develop responsible money behaviours. In other words: children learn best by doing, not just by being told.

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Age-Appropriate Money Skills

Ages 3–6: Understanding Money Basics

At this stage, children can begin to grasp:

• What money is and what it’s used for
• The difference between needs and wants
• Simple counting and recognition of coins

How to encourage them:

• Play shop with real or pretend money
• Let them help you pay for small items in a shop
• Use clear jars for saving coins so they can see their savings grow

Ages 7–10: Saving and Earning

This is a great age to introduce the idea of:

• Saving for short-term goals
• Earning money through chores or tasks
• Delayed gratification

How to encourage them:

• Give a weekly allowance with expectations for saving, spending, and possibly giving
• Encourage them to save for something they really want
• Use a simple budget sheet to track savings

Ages 11–14: Budgeting and Decision Making

As children approach adolescence, they can begin to understand:

• Budgeting for different expenses
• Opportunity cost (e.g., if you buy this, you can’t buy that)
• Basic banking concepts (savings accounts, debit cards)

How to encourage them:

• Help them open a youth savings account
• Encourage comparison shopping (value vs price)
• Let them plan a budget for a family outing or personal purchase

Ages 15–18: Independence and Planning Ahead

Teens can grasp more advanced financial topics such as:

• Income, taxes, and payslips
• Credit and debt
• Financial planning for the future (e.g., university, first car)

How to encourage them:

• Discuss real-life money matters with them openly
• Let them take control of their own budget (with guidance)
• Encourage part-time work and saving a portion of income

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Practical Money Tips for Parents and Carers

1. Lead by Example
   Children learn a lot by observing adult behaviour. Talk about your own financial decisions—how you budget, save, or choose not to buy something.
2. Use Real-Life Opportunities
   Involve children in family budgeting discussions (at an appropriate level). Let them help plan the grocery list or track spending on holiday.
3. Introduce the 3 Jars Method
   Give children three jars labelled: Save, Spend, and Give. This simple system teaches balance and priority setting.
4. Celebrate Savings Goals
   When they reach a goal—even a small one—celebrate their achievement. This builds motivation and a sense of pride in saving.
5. Teach About Advertising and Peer Pressure
   Help children recognise the influence of marketing and social media on their spending desires. Critical thinking is a key part of financial literacy.
6. Use Apps or Tools
   For older children, tools like GoHenry, RoosterMoney, or Osper (UK-based apps) can help them manage money digitally in a controlled way. (My own kids use Monzo, which is free to use. Also, if you sign up using my referral link we both get some money!)

Monzo referral link

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Common Money Challenges—and How to Overcome Them

• “They just want to spend it all!”
  → Set clear rules around how much should be saved or given away. Don’t discourage spending altogether—it’s how they learn consequences.
• “They don’t value money I give them.”
  → Let them earn money through chores or tasks. When money is earned, it’s often more respected.
• “I’m not confident teaching money skills.”
  → Use available resources. Organisations like Young Enterprise (UK), NatWest MoneySense, or BBC Bitesize offer free lessons and games.

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Final Thoughts

Teaching your child to be financially literate is a gradual process—but the payoff is huge. By helping them build strong money habits early, you’re equipping them with tools to make wise decisions, resist impulse buys, and plan for the future.

Just like learning to ride a bike, there will be wobbles along the way—but with your guidance, they’ll develop confidence, independence, and resilience when it comes to managing money.

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Want to dig deeper? Here are some helpful resources:

*Money and Pensions Service – Talk Money

*Young Enterprise

*NatWest MoneySense for Schools and Families

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Happy budgeting!

Love, Heather x