You don’t necessarily have to educate children about money in a frightening, overbearing manner full of bewildering money language. A lot of the most valuable money lessons can, in fact, be woven naturally into the everyday fabric of things starting when your youngsters can barely count to ten. The key is finding a way to adapt to where your child is at developmentally so that it’s not as much of a lecture and more of an exploration. 

Early Years (Ages 3-6)

Children are curious about everything at this age, including that jingling money in your pocket. Start with the fundamentals by telling them that money can be used to buy things. Allow them to play with notes and coins (under supervision, of course) and instruct them that different denominations are worth different values.

Make it fun though. Have a pretend shop at home where they can “buy” their toys with play money or get them to help you count out change for the real shops. This is the age range that acquires knowledge through play, so don’t worry about compound interest yet – just stick with the basics of bartering and worth.

Primary School Age (Ages 7-11)

Now we’re on to something. At this age, kids can grasp more complex concepts such as saving for a special treat. This is the ideal time to begin giving pocket money, either as payment for chores or as a regular allowance.

Help them put in place a simple savings plan, perhaps by using three jars labelled “spend,” “save,” and “share.” If they notice something they’d like to purchase, encourage them to save for it rather than simply buying it for them. Let them experience the thrill of saving for it and the pride of paying for it with their own money.

Don’t let that go by without teaching the concept of decision-making. While they are in the sweet shop with their pocket money, tell them that if they bought the chocolate bar, it would leave them unable to buy the packet of crisps too. These small decisions set the foundations for much bigger financial decisions when they grow up.

Secondary School (Age 12-16)

Teenagers are old enough for heavier stuff, even if they do not necessarily act that way. That is when you start talking about family budgets, household spending, and even allocating some financial responsibilities to them.

Try to give them an allowance for clothing or let them budget for their mobile phone themselves. When they spend it all in a week, don’t come running to their rescue. Natural consequences are great teachers, and running out of data because they spent all their phone credit on apps is a lesson that won’t be quickly forgotten.

Start talking about future cost too, such as university fees, driving lessons, or that gap year they’re set on. Let them understand just how expensive these things actually are and what kind of saving or working will be required.

Late Teens (17-18 years)

As your teenager prepares to take flight, it is time for the more advanced lesson. Open a bank account with them if you have not already, and teach them about direct debits, standing orders, and reading their statements.

This is also the best opportunity to discuss credit and debt responsibly. Explain how credit cards work, the dangers of getting into debt, and the benefits of building a good credit history. Many young people are bowled over by the availability of cheap credit at university, so a warning beforehand is essential.

Start involving them in bigger money decisions when it’s appropriate. When you’re shopping for insurance quotations or electricity providers, show them how you research and make those choices.

Foster carer can use the topic of educating around money as a way to prepare their foster children for independence. Explain that foster payments pay for the day-to-day costs of looking after them, just as any family incurs costs for food, clothing, and activities. 

Making It Stick

Don’t forget it’s not about creating mini accountants but rather secure young individuals who understand the role of money in life. Carry on discussions, don’t be overly critical of mistakes, and be a good example yourself. Children learn much more from what they see us do than from what we instruct them to do.

The financial lessons you impart today will last them a lifetime, guiding them from student budgets to mortgages with confidence and wisdom.