Some parents dread talking to their children about money. Others simply struggle to know how or at what age to begin. This is understandable: money is both a complex and emotive topic. But beginning the conversation early on helps children to form the foundations for a healthy relationship with money and enables them to learn important financial principles that will help them to successfully steward future wealth.

Creating opportunities for financial discussions

Having open conversations from a child’s early years allows parents to share their values and encourages children to formulate their own. It’s not all about numbers. A common misconception is that talking to children about money involves disclosing amounts or elements of the family’s financial life and position that may not be appropriate to share with children or young adults. Instead, the conversation should centre around communicating values and principles for managing money effectively.

The goal is to share with them what’s important to you about money and to equip them with the skills and confidence to manage their own wealth effectively. Identify any pitfalls that you wish for your child to avoid. This could be anything from entitlement to lack of confidence. Think carefully about this and find ways to discuss your views with your child.

Promoting financial confidence through practical activities

To reinforce the concepts discussed, consider incorporating practical activities into your routine. For example, you could start with simple budgeting exercises, setting savings goals for specific items, or even discussing the basics of investing in a child-friendly manner. These hands-on experiences can make abstract concepts more tangible and relatable for children.

Remember, the aim is for your child to feel comfortable and knowledgeable about financial matters. By encouraging an open dialogue, you are setting a foundation for their future financial well-being. Creating an environment where money can be discussed openly ensures that children feel confident seeking advice and making informed decisions about their finances.

Ages 3-6

Label three jam jars: “Spend,” “Save,” and “Give.” Give your child a regular amount of pocket money and divide it between the three jars. As they age, grant them greater autonomy in allocating their funds to each jar. Allow your children to make their own spending decisions for the spend jar. Resist the urge to give them more money once they have spent all their funds until they have replenished the jar.

The saving jar is ideal for storing tooth fairy money or small monetary gifts from friends and family. As your child matures, introduce the concept of interest rates by occasionally adding a small amount to the pot. You can further incentivise saving by matching their contributions.

For the give jar, involve your child in choosing a charity or beneficiary. Create memorable experiences around their gift, such as volunteering or visiting the charity to see the impact. This often sparks joy and leaves a lasting impression on children.

From an early age, involve children in shopping decisions. For instance, ask them to choose between a branded product and a white-label good, show them the price difference, and prompt them to choose.

As they age, give them money to allocate to a specific category, like fruit. This grants them autonomy over small financial decisions for the family, fostering a sense of pride in their contribution.

Ages 7-10

Introducing the concept of “needs” versus “wants” is a powerful way to help children decide how to spend their money. Start by having your child list their “needs” and “wants” on a back-to-school shopping list, then discuss how to allocate the budget.
Working for “wants” sets goals that children can feel proud of achieving. Ask your child to draw a picture or write down their want, then give them specific jobs to earn money towards their goal. Celebrate their achievement when they reach it!

Give your child a budget for a family event, such as a birthday dinner. Allow them complete autonomy in allocating the budget, including designing the menu, buying ingredients, and deciding whether to have decorations and cake. This activity is a fun way for children to learn about budgeting and making spending decisions on behalf of the family.

Ages 10-15

In our increasingly digital world, visiting a bank can still be a memorable experience for children. It provides an opportunity to understand the concept of choosing a place to store and manage money. Consider opening a minor or joint account, which will give you full visibility over transactions. Select a bank with an intuitive, easy-to-use app to explore with your child.

Help your child deposit gifts and pocket money, allowing them to watch their balance grow over time. Review monthly statements together, discussing interest rates and payments. This hands-on approach can make financial management more tangible and engaging for young minds.
Engage your child in the world of investments by organising a family stock-picking competition. Each family member selects a company they are familiar with—perhaps one that produces a favourite food or toy—and track its performance over several months. Teach your child how to look up share prices using a stocks app on an iPad or similar device.

You don’t need actually to purchase the stocks. Instead, offer to pay dividends or gains made during this period or award a prize to the winning stock picker. This activity introduces essential investment concepts in a fun and accessible manner.

Ages 15-21

Assist your older child in building a budget for school or university. Show them how to anticipate income or allowance, plan for spending needs, and distinguish between fixed and discretionary costs. Transitioning to a less frequent allowance helps them practice budgeting independently.

Encourage them to allocate funds for an emergency fund to cover unexpected expenses. This preparation builds a solid foundation for financial independence and responsible money management.

Involving a young adult in the family’s charitable giving offers a valuable learning experience about investments and family values without revealing the entire financial picture. If there’s a charitable structure or account within the family, involve your child in deciding which charities to support and how much to donate.

Invite them to attend investment meetings or review investment reports, which will provide insight into asset management. This exposure will foster a deeper understanding of financial stewardship and philanthropy, preparing them for future responsibilities.

Empower your child to build their investment portfolio by giving them money or granting control over their Junior ISA (JISA) at age 16 if applicable. Establish ground rules for accessing capital and income to guide their investment decisions. This practical experience equips them with essential skills for managing personal investments and fostering long-term financial competence and confidence.

THIS ARTICLE DOES NOT CONSTITUTE TAX OR LEGAL ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. TAX TREATMENT DEPENDS ON THE INDIVIDUAL CIRCUMSTANCES OF EACH CLIENT AND MAY BE SUBJECT TO CHANGE IN THE FUTURE. FOR GUIDANCE, SEEK PROFESSIONAL ADVICE.

THE VALUE OF YOUR INVESTMENTS CAN GO DOWN AS WELL AS UP, AND YOU MAY GET BACK LESS THAN YOU INVESTED.

THE TAX TREATMENT IS DEPENDENT ON INDIVIDUAL CIRCUMSTANCES AND MAY BE SUBJECT TO CHANGE IN FUTURE.