Teaching Kids About Money:

A Guide by Furness Building Society

A vital life lesson

Teaching young people about money: how it's earned, how it's spent and the difference between a want and need is a crucial stage in a young person’s development.

While this lesson is an important step for youngsters, a third of Brits feel uncomfortable talking about money and a fifth have never discussed personal finances with family and friends at all. It’s important we try to break this cycle.

Opening up the financial conversation with our children at an early age will support future generations of savvy savers. It will encourage a population confident in their money management and truly on top of the difference between basic necessities and life’s perks.

 

Child putting coins in a piggy bank

In this handy guide you’ll find our top tips for teaching kids about money; ways to introduce the topic and activities to help your little one put this into practice.

If you’re looking to find the best ways to save money for children or simply set up a savings account, head over to our savings hub for more information.

In an age of digital...

When we think back to the ways we were first introduced to money, what springs to mind may be piggy banks, coin purses, pocket money and maybe even the slot machine on your seaside holiday.

As the world increasingly moves away from cash toward contactless payments, finding opportunities to teach children that money is a tangible thing, exchanged for services and goods, becomes more difficult.

For children, the concept of contactless payments may be a hop, skip and jump away from monopoly money. When your contactless payments come through a phone or smartwatch, the confusion can easily stack up which creates an illusion of an endless magic pot of money.

You can try and avoid bad spending habits creeping in by showing your children how your balance reduces online as you spend throughout the day.

For example: You may wish to set up notifications on your mobile banking. Then, when you pay for your weekly shop, you’ll receive an alert indicating how much has been spent and the new balance available which you can show your children. This will help to provide a better understanding of digital banking and contactless payments.

Counting your coins

If you do find that your children aren’t used to dealing with actual cash, why not get them a small purse and empty some loose change into it. This can then be theirs to look after and manage. You could encourage them to look at the different shapes and sizes, count them up and notice the different numbers on each.

The power of earning your cash

The question of how to make money as a kid is one that many youngsters will soon ponder, as things like ice creams, trainers and video games become more appealing.

For the average UK family, a weekly spending allowance for children is quite a common concept. That said, receiving money without any action or responsibility being taken is not typically something many adults experience. Teaching this at an early age could therefore be considered counterproductive.

You could try changing this logic by only offering your child’s allowance, or altering the amount of the allowance, based on their help around the home. E.g. Cleaning the car, hoovering their bedroom or helping to cook. This kind of allowance should help to cement the ideal that money is something you are rewarded with and doesn’t often come without hard work first.

The difference between want and need

Children’s money is often spent on a number of different things. In their infancy, it’s sweets and games but as they progress into the teenage years, money becomes more of a driver as the prospect of shopping for clothes, going out with friends and even buying a car, all become a reality.

When moving into adolescence, peer pressure to have the latest thing starts to creep into a child’s conscience. At this point it becomes very important for young people to understand the difference between a want and a need.

Mastering the art of contentment and delayed gratification will give your teen more financial freedom. Try teaching that finding their clothes on Depop or Vinted is a cheaper and more sustainable way to keep up with fashion trends. Likewise, buying a second hand car will still get you from A to B and you don’t need to own all the latest gadgets to keep up with your mates - you can become the master of one.

 

Responsibility is key

For many young people, the first time they truly require a bank account may be at university or when starting their first job. At which point, the expectation is that they now understand how to manage funds digitally, budget for the month and keep on top of their finances.

You can give your children a head start by allowing them to set up a child’s saver account which will help them to practice money management. Here at Furness we have a number of different savings accounts suited to young people that will empower them to understand their cash a little better and encourage them to start saving.

Check out our beginner’s guide to money management for more handy hints and tips, for young people and adults alike.

Next steps

If you have little ones and want to get them thinking about money, why not start by implementing a few of these changes into your life and see where things take you. Communication is always key and the sooner we teach our kids about money the better.

If you’d like to learn more about savings accounts for children, get in touch today by sending us a message, calling our team on 0800 781 4311 or by visiting us in branch.