Why it’s Good to Talk to Children about Money

Money has often been something of a taboo subject, but organisations like the Money and Pensions Service are striving to change that… and we’re wholeheartedly behind them.

Having a more open and honest conversation about finance has many potential benefits, not just for adults but for children and young people, too. The Money and Pensions Service’s annual Talk Money Week aims to get us talking about money with family, friends and children and it produces special educational toolkits for schools, as well as online guides to facilitate conversations with children, parents and grandparents.

Skills, knowledge and confidence
So, why is it important to talk with children and young people about money? Money Helper which created the online guides explained that parents and carers have the greatest influence on the way young people deal with money in their adult life. Teaching them about money early on gives them the skills, knowledge and confidence to manage their money now and in the future. Giving a child responsibility for spending and saving can help them build healthy habits which will serve them throughout their life.

Money isn’t just a financial issue
Martin Lewis, founder of Money Saving Expert, recently created the first ever curriculum-mapped financial education textbook – Your Money Matters – jointly funded by Money Saving Expert and the Money and Pensions Service. He believes that money isn’t just a financial issue and points out that money problems can impact every area of our life, including mental health, happiness, work and relationships.

Marting created the textbook, which is free to download from the Money Saving Expert website, to help young people embark on a journey towards financial freedom. He says that “Companies spend billions advertising, marketing and teaching their staff to sell, yet we don’t get any buyers’ training.” The textbook includes chapters on: saving; making the most of your money; borrowing; the world of work; risk and reward; and security and fraud.

Starting young
So, when should you start having conversations with children about money?

Money Helper includes guidelines on talking to children as young as three and four. By this age, it says, many children can recognise different coins by the numbers on them, their colour, size and shape. They can grasp the idea that different things – ice cream, toys, for example – cost different amounts and that money needs to be kept safe. At this age, parents can start talking to their children about money being used for the things we need – like food and heating – as well as the things we want, like treats. The guide includes some simple games that carers and parents can play, such as adding small price tags to things like toys or treats and helping them to work out what they can buy with their 50p.

There website also includes guides and age-appropriate activities for five and six-year-olds, seven and eight-year-old and nine to 12-year-olds.

Financial responsibility
By the time someone becomes a teenager, they normally have a clear sense that they need money to be able to do many of the things they want to do. Carers and parents can support them by setting a positive example and giving young people financial responsibility. Money Helper says that giving young people the freedom to manage their own budget will teach them valuable lessons about only spending what they can afford and avoiding the pitfalls of unplanned expenses. According to the guide, how much pocket money they receive isn’t important but what is important is that they learn how to manage money. It is their first taste of financial freedom… and if they have to complete tasks in order to earn it, even better as it can help to prepare them for their first job.

Whatever age of children you care for, why not get involved in Talk Money Week? There are lots of fun activities to try and it could give them vital life skills that could positively impact almost every area of their life.