Teaching Children About Personal Finance
Money might not grow on trees, but good financial habits certainly bloom when nurtured from a young age. For UK parents, carers, and teachers, helping children understand money management is a crucial investment in their future.
Whether you’re opening a junior savings account or answering tricky questions about pocket money, introducing children to personal finance can set them up for lifelong success.
In this guide, we’ll walk you through practical, age-appropriate steps to teach children about personal finance—using real UK examples, trusted resources, and actionable advice you and your family can start using today.
Why Teach Children About Personal Finance?
Building good money habits early can make a world of difference to your child’s future. Financial education helps children:
Make sensible spending decisions
Understand the value of saving
Avoid debt traps in later life
Develop confidence to manage their own money
In the UK, research by the Money and Pensions Service shows many money habits are formed by age 7. But where should you start? Let’s break it down step by step.
Step 1: Start Early – Building Money Awareness in Younger Children
(Ages 3–7)
At this age, focus on helping children recognise coins and notes, understand that money is used to buy things, and that money can run out.
Practical steps:
Use Real Coins:
Play "shop" at home using real or pretend coins. Let your child swap toy money for snacks, or sort coins by size and value.
Talk About Shopping:
Next time you’re at the supermarket, show your child different prices and explain what you’re doing as you pay. For example, “We're using £2 to buy this loaf of bread.”
Introduce Saving Jars:
Give your child a piggy bank or jam jar for saving coins. Let them see coins add up over time.
Read Books About Money:
There are excellent children’s stories that introduce money concepts (explore Money Heroes by Young Money for fun UK resources).
Tip: Keep explanations concrete and simple—use situations they see daily, like buying snacks or sharing pocket money.
Step 2: Primary School Children – Earning, Spending, and Saving
(Ages 7–11)
Learning the Basics of Budgeting and Value
At this stage, children can learn about earning, saving, budgeting, and making choices.
Actionable ideas:
Give Regular Pocket Money:
Whether it’s 50p or £5 a week, regular pocket money helps children practise making spending decisions.
Encourage Earning Opportunities:
Offer extra cash for simple chores above and beyond their regular jobs (like washing the car or helping tidy the garden). This introduces the concept of earning.
Set Savings Goals:
If your child wants a toy, help them set a target and work towards saving for it.
Write down the goal, track weekly progress, and celebrate when it’s reached.
Teach about Choices:
When shopping, discuss the difference between things you need (bread, washing powder) and things you want (chocolates, toys).
Introduce Bank Accounts:
Consider opening a children’s savings account with your child. Many banks (e.g. NatWest First Saver) offer accounts for children as young as 7. Let your child pay in savings and check their balance together.
Step 3: Tweens and Teens – Advanced Money Skills
(Ages 11–18)
Fostering Financial Independence and Good Habits
Older children and teenagers are ready to practise real-world money management. They should learn about budgeting, saving for the future, basic banking, and digital money.
Open a Young Person’s Bank Account or Prepaid Card:
Options like GoHenry or a Santander 123 Mini Account provide contactless debit cards and apps for monitoring spending.
Budgeting Skills:
Teach your teen to list all sources of income (allowance, part-time work, gifts) and all expenses each month.
Use simple spreadsheet templates or free apps (Money Dashboard is a UK-based tool) to track spending.
Make Saving a Habit:
Encourage the “pay yourself first” rule: put aside a percentage of all money received before spending.
Set long-term goals, like saving for a mobile phone, a bike, or university.
Discuss Digital Money and Online Safety:
Teach about fraud, scams, and online phishing. Explain why passwords and PINs must be kept secret, and the importance of never sharing card details.
Take Five To Stop Fraud offers advice for young people.
Introduce Basic Investing (For Older Teens):
Explain the concepts of interest, compound growth, and risk. Discuss Junior ISAs (see below). Use simple compound interest calculators, such as MoneySavingExpert’s tool, to demonstrate the power of starting early.
Step 4: Setting Up Savings – Junior ISAs and Children’s Savings Accounts
A Junior ISA (Individual Savings Account) is a fantastic, long-term tax-free way to save for your child’s future. Anyone can pay into it, and your child can access the money at 18.
Types: Cash (savings) or Stocks & Shares (investments)
Limits: Up to £9,000 (2024/25 fiscal year)
Explore top-performing accounts via MoneySavingExpert’s Junior ISAs Guide.
Tip: Explain to your child why you’re saving in their name—and involve them in watching the savings grow.
Step 5: Real-Life Money Lessons and Mistakes
Children (and adults) learn by doing—and making the odd mistake is part of the process. Some final practical suggestions:
Let children experience running out of money (spending all their pocket money at once). Discuss consequences and plan for next time.
Help compare prices online and in shops, showing how to find the best value.
Discuss advertising and social media influence, and how companies try to encourage spending.
Frequently Asked Questions
Do UK schools teach personal finance?
Since 2014, the UK national curriculum for secondary schools includes financial education, but coverage can be patchy—so home support is invaluable.
What’s the right age to give pocket money?
There’s no universal answer, but age 5–7 is a common starting point. The key is regularity and open discussion.
Is it worth opening a Junior ISA or children’s savings account?
Yes—starting early gives savings more time to grow, and children can take ownership from 18. Check interest rates and fees before choosing.
Next Steps to Raise Money-Savvy Children
Teaching children about personal finance is one of the most valuable life skills you can pass on. It doesn’t require formal lessons—just regular, honest conversations, small-but-consistent habits, and letting children practise with real money whenever possible.
Start with pocket money, jars, and games for younger children.
Build budgeting, saving, and spending skills as they grow.
Set up savings accounts or Junior ISAs to show the importance of long-term planning.
Discuss and normalise making mistakes and learning from them.
By following these practical steps tailored to UK families, you’ll help your children build confidence, independence, and a bright financial future.
