How to teach kids about money: a guide for parents

Children start learning about money a long time before they ever open a bank account - from playing shop to deciding how to spend pocket money. 

But many kids are missing out on financial education, which could give them the skills to save regularly and feel confident managing and saving money. 

This guide explains practical, age-appropriate ideas on how to help children understand money, spending and develop real-life skills.

Children learn by watching, whether it’s tapping your card at the supermarket or from adverts on telly. 

With a lack of real money skills being taught in schools, the pressure is on parents to fill the gap. 

Below we explain tips and advice for each age group to help you and help your children or grandchildren with real money skills. 

Ages 3–5: recognising coins, understanding "we pay for things"

What they can understand and practise 

• Money is exchanged when we buy things, tapping a card doesn’t mean it’s free. 
• Different coins and notes have different appearances and values. 
• You need work to earn money, and you can’t buy everything you see. 
• Choosing one thing means leaving another behind. 

Activities to try

• Play shop- Label a few toys or snacks with simple prices and take turns being the customer and cashier.
• Coin sorting- Sort coins by colour, size or value, then add them together. Watch closely because coins are a choking hazard.
• Get them to pay- Let your child hand over cash or tap your card, and then explain how money has left your bank account.

Ages 6–8: earning, saving, spending choices

What they can understand and practise 

• Money is limited, and spending it means it goes. 
• Saving small amounts can help you save up for something bigger. 
• People can earn money by working. 
• Prices can differ, so comparing options can help money go further. 

Activities to try 

• Supermarket challenge- Ask them to find two versions of an item and compare the prices.
• Pocket money- Decide whether you want to give your child pocket money and whether it will be automatic or based on completing chores.
• Set a small savings goal- Talk about setting aside pocket or birthday money towards buying an affordable toy or experience. Make a savings chart so you can track the progress together.

Ages 9–11: budgeting, distinguishing needs vs wants

What they can understand and practise 

• Making a budget helps you plan and gives you more freedom - it’s not a punishment.
• The difference between costs being essential and non-essential and how families may view this differently. 
• Adverts, influencers, emails and in-app offers are encouraged to make you spend. 
• Digital money is real money - even if you’re playing a game and don’t see any notes or coins change hands. 

Activities to try 

• Supermarket sweep - Look at the cost per 100g per item, rather than relying on pack size or promotional prices.
• Help them plan an event- Let them help plan a birthday party, family day out or play date with friends and ask them to work out how much it will cost.
• Write a money diary- Get them to write down a diary of how much you’ve spent that week, then review it and talk about it. Make it a judgement-free zone.
• Play i-Spy the advert- Get them to look out for adverts and pop-ups in apps or online to help identify when you could be ‘tricked’ into spending money.

Ages 12–16: bank accounts, debit cards, interest, saving goals

What they can understand and practise 

• How a current account, savings account and debit card work, including balances, pending transactions, PINs and contactless payments. 
• How interest can add to savings. Older teenagers could start learning about how compound interest builds over time. 
• Starting to get them to think about bills, such as subscriptions or mobile phones, will reduce the amount of disposable cash they have. 
• Talk about financial scams and fake investments and how they can appear on social media, via text, WhatsApp or even in the post. 

Activities to try 

• Get budgeting- Start giving them responsibility for real expenses such as lunch, travel or socialising with clear boundaries over what it must cover.
• Get interest-ed- Compare what happens to their savings at different rates and show them how borrowing costs rise when a balance is not repaid.
• Become scam spotters- Ask them to look out for scams, such as fictional messages and requests for passwords or security codes.
• Get banking- You can open a bank account once a child is 11. Help them open a bank or savings account or talk to them about their Junior ISA or Junior SIPP.

When should a child get a bank account or debit card?

There’s no right answer here - but there are some options you can think about as a parent. Children can open a bank account with a debit card from age 11, while some savings accounts can be opened from around 7. Prepaid cards and apps are designed for younger kids and are controlled by a parent. 

Before you give your child a debit card, it’s worth checking this list to see if they are ready. 

Can they:  

• Understand that a tap or online purchase reduces a real balance.
• Check how much money they have before spending.
• Keep a PIN, password and security code private.
• Recognise that subscriptions and in-app purchases can repeat.
• Pause and ask an adult if a message, link or payment request feels unusual.
• Accept that a declined payment or spending mistake is something to learn from, not something to hide.

Remember to do your own homework before opening an account. It’s worth checking the monthly fee, spending and cash withdrawal controls, notifications and what happens when a card is lost. 

Common mistakes to avoid when teaching kids about money

There is no right or wrong way to go about this. But the fact you’re reading this article shows that you’re already on the path to setting your children up for a bright financial future. 

It’s not about raising a child who never makes a mistake - but instead helping them to understand that problems can be discussed and learned from. 

Here are three common mistakes to avoid: 

• Waiting too late - money lessons can be learned from playing from a young age, starting as early as three years old.
• Rescuing every mistake - children learn more when they can make a choice and learn about the consequence.
• Only talking about cash - so much spending is done electronically, it’s worth discussing this from a young age.