Talk Money Week: How to talk to children about money

10 November 2021


Jonathan Smith
Jonathan Smith
Mother and daughter sat on the floor next to a coffee table with a small pile of coins and a blue and purple piggy bank on top. The girl is dropping a coin into the piggy bank whilst her mother smiles

How to talk to kids about money

Being comfortable talking about money is a great strength to have when you’re an adult. Whether you’re saving for something big, launching your own business or need to have a chat about financial difficulties, the ability to talk openly about money can make these important conversations so much easier.

However, many people only begin their financial education when they’re an adult — 52% of 7–17-year-olds in the UK say they don’t get taught enough about money at home or in school (FinCap). By starting earlier, you can ensure that your kids grow up with the benefit of having skills and confidence around money that will help them later in life.

But, where do you begin? How do you start introducing money topics to kids at an early age? Well, to mark Talk Money Week this November, we’ve put together some helpful advice below. Read on to find out more.

Allow younger kids to handle money

For the really little ones, talking about and allowing them to handle physical money will help them to gain confidence and lay the foundation for developing better habits later.

Before you consider giving them regular pocket money, let them build up a little stash of money whenever you have a few spare pennies. You can introduce them to the idea of a piggy bank, where they can save up their coins and keep their money safe, as well as helping them understand why it’s important to do so. Take a few minutes together on a regular basis to count how much they have stored away in their bank.

A fun way to introduce the concept of value to a small child is to give them a lot of 1p coins and a range of coins of greater value, then get them to compare pennies against the other coins. Talk them through piling up some 1p pieces and some more valuable coins, then ask them which one they think is worth more. You can then explain that the other coins, despite being in a smaller tower, are actually more valuable.

Get them involved in real-life situations

Kids learn a lot from observing and interacting with the adults in their lives, so finding ways to involve them in dialogues about real-life money situations — or just even have them around when you’re dealing with finances — is a great way to immerse them from a very early age. This will encourage them to talk and think through money issues.

The supermarket is a great place to do this. You can get them involved by asking them to help you compare the price of products, load the shopping at the till or help you check that your change is correct. Even if they’re too young to help you out, you can make money-related decisions out loud or check your receipt so they’ll still learn.

Introduce them to the cost of living

As your kids spend more time around money, they will begin to see how often it’s used on a daily basis. It’s a good idea to help them learn that living has a cost and that there is value in budgeting to make sure you can afford things.

An effective way to introduce the fact that life has expenses is to talk your kids through the plan for a day out and how some items or activities will likely cost, such as getting the bus or buying snacks. Total these costs up, put enough cash to cover them in a little purse or wallet, then get your little one to help you pay for each one through the day. And, if they ask for something extra, explain there may not be enough left in the purse.

Explain spending and saving (then give responsibility)

When your kids get a little older, it might be time to help them learn from experience by putting them in charge of their own spending and saving. First, you’ll want to talk them through the importance of being patient and saving up for something they will really want and why, once they’ve spent their money, they should start saving up again.

You can back this up by starting to give them pocket money each week — not only will this back up your words, but they will take confidence from the fact that you’re trusting them with their own cash. Consider attaching this pocket money (or maybe letting them earn extra) by taking care of chores around the house, as this will get them used to the fact that money usually needs to be earned.

When your child is growing up, you might want to switch out their pocket money for an allowance to reinforce their budgeting skills. Sit down and work out how much you spend on monthly essentials for your child (such as toiletries, clothing, days out) — this will be the amount of their allowance. Then, you can talk them through the trust you have in them and their new responsibilities to look after their money.