Ways to teach kids about money

Ways to teach kids about money

Children start learning about money from early childhood. According to research by the UK government's MoneyHelper service, by the age of 7, most kids understand the value of money, the basic concept of delayed gratification and that certain decisions may cause them problems in the future.

 

In fact, research from GoHenry shows that missing out on early financial education can be detrimental later in life. Over half (51%) of those who received financial education as a child have up to £5,000 cash savings in an ISA or savings account compared to under a third (30%) of those who didn't. 40% of those who didn’t receive financial education said they have no savings at all and can’t afford to save.

 

A GoHenry account can accelerate a young person's financial education in several ways. Firstly, a GoHenry prepaid debit card can help them to establish a connection between work and money by letting them decide what to spend their money on and what to save. This teaches them to be more reflective in how they think about money. In addition, GoHenry customers have access to in-app Money Missions, where kids can watch videos, take quizzes, earn points and badges while gaining money skills for life.

Why is it important to teach kids about money?

Money plays a huge role in our lives and can affect our relationships and general wellbeing. Teaching kids about money equips them with the confidence, knowledge, and skills to manage their money effectively now and in the future. Developing good money habits is a critical skill that children need to thrive in today's world. It’s vital for their wellbeing as it helps to make their future more secure. According to GoHenry's latest Youth Economy Report, three-quarters of young people already recognise the importance of sound financial skills, saying they believe good money management skills will help them in their careers. Therefore, the sooner you start teaching kids about money, the sooner they can hone their money management skills.

What should I teach my kids about money?

There are many age-appropriate and fun ways to teach kids about money to help them develop the knowledge and skills to manage their own money as they get older. If you set up a GoHenry account for your kids, they can also use Money Missions to boost their financial education. Through fun videos and quizzes, they can learn more about budgeting, responsible spending, saving and investing. Here are some more ideas for teaching kids about money by age group.

5 to 7-year-olds

From the age of 5 to 7, your children will have likely started to develop a deeper understanding of numbers and begin learning about money at school. It's a great age to begin developing their understanding of money management.

Open a GoHenry account

You can open a GoHenry account for your child from the age of 6 to give them somewhere to put their money. You can then set up regular pocket money payments to their GoHenry prepaid debit card, so they have their own money that they can spend or save. This provides parents with a great opportunity to discuss where children think money comes from and how it's earned. You might want to set up tasks on the GoHenry app for them to complete and introduce them to the experience of earning money. Be sure to also set them up with a savings goal, so they will automatically save some of their pocket money each week.

 

 

Collecting coins

We might be living in an increasingly cashless society, but children still need to get the experience of handling cash. Give your child a piggy bank or even just a clean jar, and they can start collecting coins to put in it. It's a great way to ensure they can recognise and count coins, while also introducing them to saving. Encourage them to fill the jar to the very top with coins, and they'll enjoy watching their savings grow before their eyes. Once they've filled the jar, transfer the money to the GoHenry prepaid debit card, where they can add it to their savings goal.

Giving back

Children often enjoy helping other people, so they will probably like the idea of donating to charity. As well as being a nice thing to do, this also shows them the value of money and how it can help people less fortunate. With GoHenry, children to make a one-off or regular donation to the NSPCC (capped at 20 pence per week), using the new Giving function in the app. Alternatively, you could give your child some coins that they can put in a donation bucket and briefly explain how the charity they're donating to will help people. They could also donate old clothes and toys to a local charity or choose a couple of extra small things at the supermarket to put in a food bank collection.

7 to 11-year-olds

Between ages of 7 to 11, most children will become consumers for the first time and begin to understand the difference between their wants and needs. So it’s the ideal time to encourage them to start thinking about achieving some of their ‘wants’ through saving and earning.

Purchasing power

Giving your children their own money to spend is the best way to start their financial education. Today, most purchases are made by card, so it makes sense for children to begin learning how card payments work. Pay pocket money into their GoHenry account and encourage them to use their GoHenry prepaid debit card to make their purchases. They can then check their GoHenry app to track their spending and see how much money is left.

Learning the differences between want and need

Talk with your children about what it means to want something like a new pair of trainers or an ice cream compared to needing food and somewhere to live. You can use this as the foundation of talking about budgeting and helping them understand spending choices: if we choose to buy something, we may have to do without something else. You can also link this with the relationship between working and earning.

Incentivise saving

Delayed gratification is something that many children struggle with. Helping them understand saving can show them the many benefits of not getting what they want straight away. Whether they want a new pair of trainers, book or scooter, encourage them to set themselves a savings goal and work out how long it will take them to afford the item they want. They can use their GoHenry app to watch their savings grow.

11 to 14-year-olds

From age 11 to 14, children usually start to want more independence, and you can support them by encouraging them to take responsibility for their spending and saving choices.

Budgeting

Older children and teenagers can start learning how to live within their means. Help them set a budget for how they might spend their pocket money while discussing what you expect their pocket money to cover. Make sure they understand that if they overspend on something, they won’t have the money to purchase something else, and you won't be bailing them out.

Ads and scams

Every day, your kids are bombarded with adverts, and with the popularity of influencers, they're more than likely being targeted on social media, whether they realise it or not. It's a good idea to talk to your children about paid promotions and how they work to help them make better-informed decisions about what they spend their money on. You can also use it as an opportunity to chat to them about the risk of scammers, and if something appears to be too good to be true, it probably is.

Encourage them to earn

Children can't get a part-time job in the UK until they're 13, but they can still earn money with your help. You can set up regular pocket money payments in your GoHenry app and housework tasks for them to complete. Paying kids to do tasks helps emphasise the link between work and earning. Once they earn money, they can make their own financial choices in terms of budgeting, spending or saving.

13 to 16-years old

When a child hits 13 and becomes a teenager, they tend to have bigger and more expensive aspirations and money starts to matter to them more.

Become a critical consumer

Teenagers are of the age to start giving more thought to what they buy. Help them become a critical consumer by explaining how they can spot a good deal. Encourage them to shop around rather than buy the first thing they see, compare rates and read the small print.

Crank up the savings

It is only a few years until your teenager will go to university, want to buy their first car or move out to a place of their own. Alternatively, they may have more immediate goals in mind, such as festival tickets or some new clothes. Whatever they have their eye on, now is the ideal time to get them started with saving for their future. In their GoHenry app, they can set a savings goal and set aside a portion of their earnings, whether from pocket money or a part-time job.

Discuss debt

In December 2021, the average amount of unsecured debt per UK adult was £3,745. That’s why it’s important to help your teenager understand what it means to borrow money and the consequences of not repaying it. Talk with them about the different types of credit and if you lend them any money, ensure they pay it back, so they learn the difference between a gift and a loan.

How to teach kids about money

There are many ways to teach kids about money and start meaningful conversations about money, budgeting, and saving.

Use a financial education app such as GoHenry

Set your kids up with a GoHenry account, and they'll have access to a huge library of financial education resources. GoHenry's in-app Money Missions cover money basics, including spending, saving, investing, borrowing, giving, and compound interest. Kids can take quizzes, watch videos and even earn badges and points as they develop their money skills.

Set a good example with your money habits

Children can start forming money habits from as young as 7, and these habits are likely going to be influenced by the way they see their parents approach money. Set a good example for your children, and they'll be more likely to follow it as they get older.

Teach kids the value of money by encouraging them to earn it

To encourage your children to understand the value of money and become savers, encourage them to earn their own money and learn how to use it.

Let them take control of their spending

Give your children a chance to learn how to take financial responsibility by giving them a little pocket money or paying them to do household tasks.

Set a budget with your child

Encourage your kids to start practising budgeting, whether to help you budget for a day out and all the costs involved or to budget their own money to cover the things they want.

Let children get familiar with money from a young age

Get your kids handling money from an early age to help them build confidence and familiarity with it. Let them handle coins, notes and even your debit card and even set them up with a piggy bank or money box to keep their cash in.

Teach them the difference between needs vs wants

Help your kids understand the true value of money by teaching them the difference between needs and wants. Explain that needs are life's necessities such as healthcare, food, shelter and clothing. Wants are everything else, the things we could essentially live without, such as the latest trainers, a new smartphone or a takeaway pizza.

 

 

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Written by GoHenry Published Feb 1, 2022 ● 6 min read