How to teach your primary-aged children and grandchildren about money, and why it matters

Research shows that 5.4 million children may lack essential money skills in adulthood, so read five tips to help you teach your children valuable money lessons.

Although financial literacy has been part of the National Curriculum for almost a decade, many schools still don't teach personal finance as a standalone lesson. More worryingly, academies and independent schools don't have to teach it at all.


In fact, research from the Money and Pensions Service has revealed that fewer than half of children have received any “meaningful financial education”. And 5.4 million children will lack the money skills needed by the time they reach adulthood.


With financial education still inadequate in schools, it's up to parents and grandparents to teach children about pretty much every aspect of money. So where should you start and how do you make it fun, interesting, and even profitable for everyone concerned?


Here are five practical tips to help you teach your primary-aged children and grandchildren valuable lessons about money.


1. Set up a satisfying savings jar


There's no age too young to start learning about money. So, as soon as your children are old enough to understand that they shouldn't put pennies in their mouths, introduce them to the idea of saving money in a jar.


This is an ideal opportunity to explain what money is. Show them all the different coins and notes, and even your credit and bank cards and tell them stories about how you use them and what they will buy.


Then, set up a transparent jar and start adding loose change to it – using a strong glass jar may be best as it will produce a satisfying clink whenever coins are added to the pot!


Over time, they will watch the pile grow. When the pot is full, help them count the change and have a conversation about how they could spend it.


This will help them understand the basics of the value of money.


2. Make saving fun


If you've already set up a piggy bank or savings jar, you'll be well on the way to showing youngsters how much fun saving can be.


Equally important as saving, next it’s time to teach them about how to spend money. Go about things the right way and this should be even more fun. 


Count up the money that’s been saved in the jar and talk about how much there is, how much you want to spend, and what the money could buy. Be sure to let them decide what they want to spend it on.


This is an ideal opportunity to open the conversation about the difference between “wants” and “needs”. You may also discuss the pros and cons of buying toys and games, versus enjoying a fun day out.


As you chat, be sure to open up the possibility of not spending it yet, and continuing to save instead.


3. Turn a trip to the bank into an event


Saving in a jar or a piggy bank and spending pocket money is great for teaching children to save for short-term goals, but once your children are old enough, you could advance to a real bank.


Make an event of it and help your child open a savings account. While this can be done online, doing it in person at your local bank can help you ensure your child can be involved and watch what happens.


To open an account, you'll need to provide ID and address verification. With a little planning, you could involve your child in getting the documents together ready too. This will help them understand the importance of personal ID and address data, which are integral when dealing with and managing money.


Once you have set up the savings account, encourage them to make regular deposits – perhaps suggesting a specific amount they could aim to save in their jar and then taking a portion of the money to deposit in their bank account.


As the balance grows, you can use the opportunity to discuss the concept of interest and how the bank pays people back for saving their money.


4.  Show them the magic of compounding


Now your child understands the positive effect interest can have on their savings, consider introducing them to the concept of investing.


To show them how they could, over the long term, enjoy the potential of seeing their money grow even more, open a Junior ISA (JISA) – a tax-efficient way to help your child save more money.


While it’s possible to invest up to £9,000 a year through a Stocks and Shares JISA, there’s nothing to stop you from either investing a sum on their behalf, or helping your child transfer some of their savings to their new JISA.


Investing even a small sum could help them to see how the value of their investment fluctuates with share performance. Invest over a broad range of companies over the long term and your child’s money may begin to grow. By reinvesting dividend income, your child could benefit from even greater returns on their investment.


Once the JISA has been given some time to grow, gather their JISA statements up and go through them together to see the effect that compounding has had on their money.


5. Create opportunities for them to earn money


Finally, it could be fun to be creative with pocket money and find ways for your youngsters to earn a little extra cash.


For example, tidying their bedroom could be worth an extra £1 each week, emptying the dishwasher could be worth £2, or helping to clean the bathroom could be worth £3. Alternatively, encourage them outdoors into the fresh air by tempting them with a fiver to weed the garden or wash the car.


Be consistent in your approach, maybe even involving them in conversations about jobs they could take on and what value could be applied to each chore.


Using financial incentives can help teach children how hard work results in financial rewards.


Get in touch


If you want to explore how I can help you involve young family members in your financial planning journey, please get in touch.


Email or call 07824 554288.


As a new mummy, I will be on maternity leave until July 2024, so I appreciate your patience until I am back at work full-time.


Please note


This article is for general information only and does not constitute advice. The information is aimed at retail clients only.


Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.


The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 


Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.


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