How to teach kids the value of money

How to teach kids the value of money

Getting your kids to understand the value of money can be challenging. Younger kids tend to think money simply comes out of the ATM, while older kids assume cash is always on tap (via you) whenever they need it. This is why helping kids to understand the value of money is key to ensuring they make sound financial decisions for life.


Related: Financial literacy for kids




Why should you teach kids the value of money?

No matter your child’s age, the basis of a good financial education starts with learning about the value of money. Without this fundamental concept, kids will assume cash is always available, doesn’t have to be earned and is not something they need to be concerned about.


Our analysis with CBI Economics reveals:


  • Prioritising financial education with your child will add an extra £6.98 billion to the UK economy each year (£202 billion by 2050).
  • Financial literacy also raises early-career earnings prospects by up to 28%.
  • If everyone received financial education at school, an additional 76,400 businesses could be created each year, resulting in an annual increase of 123,000 direct jobs.

Related: Advantages of teaching financial education in schools

The sooner you start, the better

Financial education can start at any age, and the sooner you start, the better, as it allows kids to build their financial literacy step by step in an age-appropriate way.


According to a Cambridge University study, most children can grasp the value of money by the age of 7. It sounds early, but by seven, kids start to think logically, understand reasoning and are capable of more complex thoughts.


It helps to:


  • Start talking to them about money in an age-appropriate way
  • Allow them to experience spending or saving with their own money
  • Have discussions about where they think money comes from
  • Talk about how you earn money


Related: Teaching kids about money

Explain money and answer all questions

The best financial lessons are the ones you regularly discuss with your kids. Don’t be afraid to talk in an age-appropriate way about how much things cost, how you work to earn money, and how the money you earn pays for food, clothes, and outings. This helps kids understand that cash flow isn’t endless, and you need to make careful choices around spending.


Says Simone Gnessen, Financial Coach, Founder and Director of Wise Monkey Financial Coaching and co-author of Sheconomics, "Don't make money a taboo subject in your household. To help your children understand the value of money, include them in conversations about spending, how you prioritise spending choices when there’s a lack of affordability how you go about resolving it."


Give them real-world examples to help them understand this when you are out. For example:


  • When buying something new, talk openly about the cost and how long it’s taken you to save and work for it.
  • When grocery shopping, play a game and see who can find the cheapest loaf of bread, milk or apples so kids can see similar items have different prices.
  • When buying cereal, choose an own brand over the better-known brand and explain why.
  • When you don't have enough money for wants, explain why needs have to be prioritised first with money.


Everything is easier when you’re having fun

As any parent knows, messages are more likely to stick for kids when information feels less like a lesson. The best way to help kids understand the value of money is to give them pocket money and allow them to make decisions with it.


For instance, if they ask for a toy or a treat, suggest they buy it with pocket money. This allows them to think about how much money they have, how much they will have left if they buy the toy/treat, and if the item is worth buying.


Another way to teach kids the value of money is with games, and role play. Some of the best games for younger children are designed by Orchard Toys look for Shopping List, Pop to the Shops and the Money Match Cafe Game.


For older kids try board games such as Game of Life and of course Minecraft, which teaches kids all they need to know about managing limited resources strategically and delaying gratification.


Finally, do not underestimate the value of role playing games such as running your own pretend cafe or shop at home with real coins and your kids as customers.


Related: Financial literacy activities




Teach them about spending and saving when you go shopping

Learning how to spend and save goes hand in hand with the value of money conversations. Louise Hill COO for GoHenry suggests:

"If you're taking kids to the shops, especially younger ones, use it as an opportunity to play games that show them the value of money. One approach could be asking kids to choose between a brand and an own-brand version to show them the difference in price. There are lots of simple ways to do that and bring the value of money to life for children so that it's meaningful, without having to go into complicated details."

At the same time encourage your kids to have saving goals (these can be set up in their GoHenry app) so they can experience the power of saving for themselves.


It’s best to set a mix of short-term and long-term goals. A short-term goal for a toy/item they want will encourage them to save as it will show them how fast they can save for something if they try. A long-term goal will show them how much money will accumulate over a set period if you put a little away every week.


Start them with pocket money

The best way to really bring home the messages about the value of money is to let your children experiment and learn with their own money.


Says Louise Hill, "If there's just one thing that you can do for your kids I'd say it's giving them pocket money, even if it's just 20p.It really doesn't matter how much, but if you can give them some pocket money in any way shape or form, that they can control, and they can make decisions over, that's the biggest empowerment you can give your kids. It lets them make decisions, it lets them make mistakes, and they will learn."


Related: How much pocket money

Help them build other financial skills

Talking about the broader picture of money is another way to bring home the value of money. With older kids, discussions around the cost of living are a good way to talk about how as an adult, you need to prioritise what you spend – even though you might be tempted to buy something you can’t afford. With younger kids, talk about necessities, luxuries, and need vs wants to trigger a bigger discussion about budgeting and money management.


Related: Helping your child cope with money worries

Show kids the value of giving

We all want our kids to be grateful for what they have and show compassion for those in need. Which is why teaching them about the importance of giving and thinking of others can help them grow into productive, kind and generous adults.


Use everyday examples of giving and donating that your kids can relate to. For instance, that time they gave their old toys and clothes to the charity shop to help others. Or the time they bought a red nose for Comic Relief . Point out that these little acts of kindness are examples of donating to help others. You can then use this to build on and explain other ways they can donate, such as donating through the Giving feature on the GoHenry app.


How GoHenry can help

A GoHenry card can help cement the money lessons you teach your kids by showing them the benefits of pocket money, saving and how to spend sensibly. The GoHenry app also features Money Missions which allows kids to earn points while watching videos and taking interactive quizzes on topics including saving money, spending wisely, and investing. The app is designed to be used alongside our prepaid debit card for kids





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Written by Anita Naik Published Apr 26, 2023 ● 4 min. read