Make your kids ‘Money Smart’
I rarely use cash, especially since the pandemic encouraged us all to shift even small amounts of spending to contactless cards or mobile phones. In fact, most of my encounters with cash nowadays are when my kids get their weekly pocket money. I’m all for kids embracing and becoming familiar with digital technologies, and that should definitely include managing and using money. Nevertheless, I worry that an understanding of money itself, and, more importantly, the value of money, is harder to teach these days without something tangible, like cash, to tie it back to.
In the UK, financial literacy education forms part of the National Curriculum, but is mostly only taught in secondary schools (key stages 3 and 4) and, in any case, its implementation is both patchy and does not go far enough. Recent research has found that 61% of young adults did not recall receiving any financial education at school and that around 30 hours of financial education for 11- to 18-year-olds would be the minimum amount needed to achieve financial literacy1
I firmly believe we need to start much earlier than that. Sure, you need good numeracy skills, but those are just tools, building blocks for a good financial foundation. The earlier you start, the more concepts you can cover. By understanding financial basics early on, children are better equipped to tackle complex financial decisions later in life, from student loans to mortgages. And this all feeds into another one of my “soapbox” topics: entrepreneurship. We should be exposing kids to the concept of enterprise and business early on, and financial literacy is a key component of that.
Taking Action: Empowering Your Kids
The good news is, you, as a parent, can play a crucial role in building your child’s financial literacy. Here are some practical steps to get you started, turning everyday moments into money lessons.
- Involve your child in creating shopping lists and discussing the cost of items. Let them help with budgeting by allocating amounts for different categories, like groceries or treats.
- Provide opportunities for them to earn pocket money through chores or simple tasks. Guide them on how to divide their earnings, encouraging them to save for a dream toy while putting some aside for future purchases.
- Board games can be powerful learning tools. Try age-appropriate games like Monopoly Junior or Pay Day that introduce basic financial concepts like buying, selling, and budgeting in a fun way.
Use your household as an example
Once you’ve covered the basics, you should introduce financial concepts into everyday conversation by talking about your household finances (in an age-appropriate way). You can discuss household expenses like rent, bills, and groceries to help them understand how money flows in and out of a family. And be open about the concept of work and income. Discuss how earning money allows us to afford things we want and need. This is a step up from pocket money: we want our kids to know that money is an exchange of value, not something that appears “out of nowhere”.
More resources
- MoneySavingExpert has a wealth of additional free resources provided by financial institutions and charities, as well as a free-to-download financial education textbook by Martin Lewis himself.
- MoneyHelper, by the Government’s Money & Pensions Service, has a whole raft of guides for how to talk to kids about money at different ages
- Books aimed at children, like “The Great Pet Sale” (ages 3-5), “Lift-the-flap Questions and Answers about Money” (ages 6-8) and “The Young Investor: Projects and Activities for Making Your Money Grow” (ages 9-12) cover all sort of financial topics in an age-appropriate way.
Let us know of any resources or approaches you have found useful in the comments.