Children who receive a meaningful financial education at home are more likely to be active savers and are more confident talking about and managing their money, research shows. They are also more likely to have positive attitudes towards money.
However, new data from the Money and Pensions Service (MaPS) reveals that less than a quarter (24 per cent) of children are being actively taught about money at home. It also shows that only 35 per cent of parents or carers say they set rules around how their children’s money is spent.
MaPS warns that the rapid digitisation of money – with many children now using their own debit card and linked app – brings serious implications and risk for children and young people learning about how to manage their finances. The organisation says many parents lack knowledge about how digital banking apps aimed at children work, and often don’t oversee their spending.
To help make financial education fun and practical in the real world, MaPS has rounded up six tips from its free digital tool Talk Learn Do to use during the six-week summer break:
1. Start Early
It’s never too early to start teaching your children about money. MaPS research shows that children begin developing skills, knowledge, attitudes and behaviours around managing money between the ages of three and seven. These skills then continue to develop throughout childhood and teenage years.
Hints and fun suggestions for talking to your children about money, depending on their age.
Top 7 apps to help children manage money
2. Talk to Them
You are the most important influence on your children’s attitudes towards money, and better financial understanding around finances will come from meaningful conversations.
How to Talk to Your Children about Money, to help structure these conversations.
3. Discuss Digital
The way children learn about money has evolved in the digital age, with digital platforms playing an increasingly influential role. And with cash in declining use, children are less exposed to physical notes and coins being exchanged.
Your children’s understanding of the value of money is therefore being shaped by these new interactions, which means it’s a good idea to have a specific conversation with them around digital money.
How to have a digital money conversation.
5 financial gift options for children
4. Get them Involved
Most children (91 per cent) already have some responsibility about how they spend their money, but to increase this, one way to start is to involve them in the weekly food shop.
Your children can help make the shopping list, seeing what’s already in cupboards and what is running low. Find out more about how your children can help make the shopping list on MoneyHelper.
Give them a certain small amount of money to spend in the supermarket and explain that the food they choose needs to be suitable for your family size for a week.
5. Make Rules and Stick to Them!
Only around a third of parents or carers (35 per cent) say they set rules about how their child’s money is spent. If you are teaching children about money for the first time, it’s important that rules are set and stuck to.
One way to do this is to set a maximum budget within their pocket money that your children can spend on luxuries each week.
Evidence shows that even very small amounts of regularly received pocket money increases children’s ability to budget. Sticking to rules and giving pocket money can also reduce pestering in the long run.
7 ways to teach children good money habits
6. Don’t Panic – You’re Already Doing More than you Think
Your children will already be picking up on small cues around what you do and say around money. So don’t panic if you haven’t started teaching them about money just yet. The important thing is you are starting now.
