Teaching the basics of financial responsibility to kids

Teaching the basics of financial responsibility to kids

Financial responsibility requires an understanding of the basics of money management, including how to save, earn and invest money, and make smart decisions around living within your means.


Related: Financial literacy for kids


8 tips to help you teach your kids financial responsibility

  1. Using Money Missions on the GoHenry app
  2. Involving kids in household shopping and budgeting
  3. Setting savings goals with GoHenry 
  4. Opening a GoHenry prepaid debit card account for your child 
  5. Setting a family budget together
  6. Introducing pocket money to help kids budget their own money - can help kids learn where money goes
  7. Understanding how earning more leads to saving more
  8. Reading the fine print in contracts, so they know what they are spending/saving



Why is it important to teach kids about financial responsibility?

We live in a challenging world, where important financial decisions must be made daily. It's why we believe that teaching your kids financial responsibility from an early age is key to their future financial success. So whether your kids are 4 or 14, here's how to talk about financial responsibility and encourage them to stay in control of their finances.


“Managing money effectively demands a sophisticated set of skills ranging from basic mathematical skills to budgeting, an understanding of how interest works or emotional regulation to avoid splurging. Recent CBI Economics analysis commissioned by GoHenry and Wilson Wright underlines that financial literacy raises early-career earnings prospects by up to 28% and that students with high financial literacy are more likely to start a business. It’s why we believe all kids need to know the basics of financial responsibility.”


Louise Hill, Co-founder and COO of GoHenry

Countless studies show that prioritising kids' financial education is an ideal way to boost their chances of staying solvent and financially healthy for life. Our own research, conducted in partnership with Censuswide and Development Economics, shows that adults who didn't receive financial education as a child are now more likely to be unemployed or earn less than the national average wage of £31,447.


Analysis by the Money Advice Service has also found a clear link between financial literacy and adult outcomes, particularly health and life satisfaction. Savers are more likely to rate their health higher, have better mental health, and have better life satisfaction. 


Another study from Brigham Young University even goes as far as to predict adults who learn financial responsibility as kids have more fulfilling relationships in adulthood. The research, published in the Journal of Family Issues, surveyed nearly 2,000 participants between 18 and 30 found that by teaching children about money, kids are more likely to have healthy financial behaviours like saving and budgeting. These healthy habits lead to less stress about money, which puts less pressure on a relationship.

Understanding what being financially responsible means

Understanding what being financially responsible means is, however,  hard when your kids aren't yet accountable for their finances. However, Beth Zemble VP of Education for GoHenry points out,  “Research (CFPB – Consumer Financial Protection Bureau) has shown that kids start to develop the values, skills, and attitudes surrounding money and financial habits in early childhood. They begin to develop skills like planning ahead and understanding the concept of delayed gratification. 


“Additionally, they are developing attitudes (which the adults in their lives inform!) about concepts like frugality and self control, and they begin (in middle childhood – 6-12) to develop behaviours that are aligned with their emerging values about saving and spending.”


This means you can explain the basics simply with short explanations to most children saying financial responsibility means:


  • Paying your bills on time. 
  • Not spending more than you can afford. 
  • Not borrowing more than you can afford to pay it back
  • Saving so that you have money for the things you want (holidays, clothes, a car)
  • Budgeting so that you have enough money to look after yourself (food, rent)
  • Knowing the value of money, so you spend wisely
  • Earning money, so you have more options



Explaining the basics of financial responsibility to children

Behind all the examples of what being financially responsible means are the key basics of financial responsibility, which can be taught from a young age.


  • Needs vs wants

The best way to explain Needs vs wants is to remind kids that you have to take care of your financial needs before your wants; otherwise, you won't survive. That notion may sound drastic to kids, so explain it in an age-appropriate way, without going into complicated details that could worry them.


“An excellent way to do this is when you take kids to the shops,” says Louise Hill. ”Use shopping for groceries as an opportunity to talk about wants and needs. So we need the bread and the chicken, but we don't need - we want - the chocolate cake and ice cream, for example.”


  • Budgeting

While budgeting may take time to learn and perfect, you can show your children how this is done. Explain that a budget is simply a weekly or monthly spending plan that shows you the money coming in (pocket money and earnings) and money going out (spending). Sticking to a budget means avoiding spending more money than they have and getting into debt. 


Related: Teaching budgeting to kids


  • Saving your money

51% of people taught about money in childhood have up to £5,000 in savings, compared with 30% who were not. Showing your child how to save and why saving is a good thing is easily done by setting goals that enable them to save for and buy things they want.


  • Borrowing and debt

Talk to your kids about borrowing and debt by occasionally letting your kids borrow money from you. This is a straightforward way to illustrate what these terms mean. When they run out of money but want to buy something or go somewhere, let them borrow money but add a repayment schedule to it. Have your kid sign this schedule that shows how much they agree to pay back each week until the money is paid off. Explain that this is borrowing and debt.



Related: Teaching your child about credit


8 tips to help you teach your kids financial responsibility

  • Opening a GoHenry prepaid debit card account for your child.

GoHenry is a prepaid kids’ debit card that can help kids in several ways. Not only does it give kids the independence to use a debit card in the real world, but it also helps them learn about the value of money and how to make smart financial decisions. It teaches them about money management and the importance of tracking their spending, and also allows them to set savings goals. 


  • Using Money Missions on the GoHenry app.

On the GoHenry app, you'll also find Money Missions designed to help kids learn everything they need to know about finances. Money Missions improves your child's financial know-how around saving, earning and budgeting, building confidence, literacy, and curiosity in 6-18-year-olds. Kids can watch animated videos, take quizzes and earn points and badges as they progress through the levels.


  • Setting savings goals with GoHenry.

Delayed gratification is something that many children struggle with, which helps kids to understand saving can show them the many benefits of waiting for what they want.


Delaying gratification is an important discussion to have as it teaches kids how to spend wisely and be financially responsible.


Simonne Gnessen, Financial Coach, founder of Wise Monkey Financial Coaching and co-author of Sheconomics, agrees, "To understand why they need to delay gratification, talk to your kids about how marketing tricks and advertising try to lure them into thinking that they have to have something. Emphasise that whatever they want, it's better to think before spending and set a savings goal."


This is an important skill for kids to master when it comes to being financially responsible. Whether your child wants a new pair of trainers, a book or a scooter, encourage them to work out how long it will take them to afford the item they want. Then they can use their GoHenry app to watch their savings grow.


  • Involving kids in household shopping and budgeting.

Involving your kids in everyday activities like grocery shopping and budgeting can bring lessons on financial responsibility to life. Younger children turn shopping for household items into a game where they try to find the lowest price. With teens, allocate them a budget and send them shopping on their own to see how well they can shop within a budget.

Says Sue Atkins, Family Parenting Expert and author of Parenting Made Easy, “Help your children learn the differences between needs, wants, and wishes, as this will prepare them for making good spending decisions in the future. Also, give them pocket money, regardless of the amount, as this helps to teach children to make choices, save up, and learn to wait for things they want.”


  • Setting a family budget together.

While it can be daunting, the current cost of living crisis provides an excellent opportunity to start conversations around setting a family budget. Rather than shielding kids from financial issues, get them involved with small day-to-day decisions like shopping around for better deals on everything from clothes to food to days out. Cut back on takeaways to save money for bigger items you want as a family.


  • Introducing pocket money can help kids learn to budget and understand where money goes.

“By providing kids with an income – in the form of pocket money/allowance – you give them the opportunity to have real life practice with all of these critical skills which form the building blocks of their adult financial capability.”  

Beth Zemble, VP Education for GoHenry


Providing opportunities for children to manage money and make their own financial decisions is one of the most important things you can do to help them form good habits. When kids get hands-on experiences to practice managing their own money, it helps them build confidence. Then when they manage their own money later, it won't be their first experience.


  • Understanding how earning more leads to saving more.

Our data shows that, in the UK, just over a third (34%) of young people have a part-time job. As kids get older, another aspect of financial responsibility is helping them understand that earning more doesn't mean spending more. Instead, teach them to be savvy with short-term savings (holiday, car) and long-term savings (pension and saving for a house). Again start young and set up a series of saving goals on the GoHenry app, which incorporate these short and long-term messages.


  • Reading the fine print in contracts so they know what they are spending/saving.

Part of being financially responsible is teaching kids, especially teenagers (who will soon be looking at loans for university), to read the small print, especially with terms and conditions and contracts. You can start them early by encouraging them to look at what they are signing up for with gaming apps – and even GoHenry – so they begin to understand the bigger picture with finances.


  • Using GoHenry to put financial responsibility into practice.

Kids learn best by doing. So show them how to manage money for themselves with a GoHenry prepaid kids debit card.  Available for kids aged 6-18, GoHenry is a safe way for kids to practice their financial literacy skills. There’s a companion app for parents which allows you to pay pocket money, monitor spending, top up when necessary and create saving pots.




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Written by Anita Naik Published Jun 30, 2023 ● 6 min. read