There are some essential lessons that children don’t necessarily learn in school, even if they’re taught as part of the curriculum. And for all the progress in developing financial education in schools across the UK, money is among the subjects that kids can really learn about at home.
Talking about the ways in which we save, manage and use our money helps us ensure tomorrow’s adults are equipped with the financial literacy they’ll need in life. My Money Week, which began on 9 June, is a UK-wide initiative aimed at school age children to help them understand the importance of money.
But research by the Money and Pensions Service found that less than half of children aged seven to 17 receive a meaningful financial education. It also reported that three quarters of teachers believe most young people leave school or college without the money skills they need.
So, what can you do to teach children about the value of money and eventually investing? Here are some ideas.
Spend pocket money wisely
Kids in the UK get more than £185m in pocket money each month, averaging out at nearly £55 a month, according to a 2024 survey by Santander. It varies significantly, of course. While 9% of children receive more than £150 a month, 18% don’t get any pocket money, according to Santander.
Parents might not relish the idea of giving money to their children – but it’s a great way to get them engaged with their finances and into some habits. Be consistent so that they can plan and save for their goals, but also learn to budget for things like toiletries, as they get older. Agree on a set amount per week and stick to it. This way, if they want to save for something, they can work out how long it will take them. See our recent article on how pocket money can teach your kids to invest for more on this.
Explain where money comes from – and where it goes
It’s natural for children to think that money grows on trees, so explain that you have earned it by working. Offer pocket money in exchange for simple chores like tidying their bedroom, to show that nothing comes for free.
Your household bills can be an opportunity to explain all the different things that cost money, and how you use your earnings to pay for it. Get them involved in managing the family purse strings by taking them to the supermarket and get them involved to help them build an appreciation of the cost of everyday items.
Allow them to make decisions
Once children have their own money, let them decide how to spend it. If they buy a DVD and then later don’t have enough to get some sweets, they’ll soon realise that they can’t have everything and that it’s important to prioritise. Some of this is about trusting them and giving them more responsibility for their saving and spending.
One option is to award a monthly allowance linked to performance criteria such as school attendance, homework, domestic chores and maybe certain behaviours. They can then decide whether to use up their allowance each month or save the credit they’ve built up for the future.
Open a bank or savings account with them
From age 11 you can open a bank account for them with certain banking providers, while prepayment cards – on which they can’t spend more than they have – are sometimes available for kids as young as 8. They can’t open an account for themselves until they turn 16, however.
Bank cards can be especially educational when paired up with a mobile phone app. These include pocket money apps where parents and children can set spending limits, savings goals and tasks.
Find the best savings vehicle together
Once your child is able to understand saving with a bank, choose an account together. Whether it’s a Young Saver or a Junior ISA (JISA), going through the research process with them is a brilliant way to help children understand saving and investing. Explain why you have chosen a certain account and this will start to introduce children to savings terms, tax and interest rates.
Best 5 platforms for Junior ISAs
| Platform | Fees | Minimum lump sum | Other |
|---|---|---|---|
| Fidelity Personal Investing | None | £100 or from £25/month | £1.50 for deals as part of a regular savings or withdrawal plan, or for a reinvestment of income or a dividend, simple charge of £7.50 for each deal placed online |
| Vanguard | 0.15% (capped at £375) plus fund management fees from 0.06% – 0.79%. Minimum charge of £48/year | £500 or from £100/month | Only Vanguard funds and ETFs. No shares offered |
| AJ Bell | 0.25% | £250 or from £25/month | |
| Nutmeg | 0.65% – 1.11% | £100 | Fees range depending on one of the four investment styles chosen |
| Hargreaves Lansdown | None | £100 or from £25/month |
While children can’t manage their account until 16 or access it until they turn 18, JISAs are a great way for parents to show how investing even modest amounts regularly – and reinvesting the profits – can generate an impressive pot over time. Certain apps can help with this. For instance, Beanstalk allows you to manage a junior ISA flexibly and focuses specifically on family investing.
Go digital
Your children are growing up as digital natives, so it makes sense to ensure their tech-savvy ways work in their favour when it comes to their finances. The range of digital resources designed to engage kids with money is growing all the time, from games and interactive decision-making exercises to savings apps.
Digital accounts such as GoHenry, Rooster (from NatWest), Gimi and HyperJar are among the many options that can help children manage their money in a responsible way. Most come with prepaid debit cards and parents can access the app too, allowing them to add money, monitor spending and help their kids to create tasks or goals and set spending limits.
Set a good example
Remember, children will pick up your good habits as well as bad ones. So, when you’re out shopping ask them questions such as “do you think this is too expensive”? And don’t impulse buy in front of them – teaching them the benefits of delayed gratification is vital. If you practise what you preach and are smart with your own money, then children are more likely to follow suit.
We have more on the best platforms for Junior ISAs, and you can find the best platform for your needs by using our free comparison tools!
Photo by Nadezhda1906 on Canva
