How to teach your children about financial planning

teach your childrenIt’s never too soon to start to start teaching children about money. Creating good financial habits can start as soon as they can tell chocolate money from the real thing.

Of course, there’s no point in trying to explain to a toddler why diversification is a sound foundation for investment.  Helping children understand about money needs to be done in stages, and to keep them interested and involved, it has to be fun.

We look at what to teach children about money as they grow, and how it could help them become a financial planning enthusiast before they even leave school.

4 to 6

Money is perfect for teaching counting, and young children can learn the basics of maths as well as finance simply by playing with cash. The idea that the right amount of pennies are equal to larger coins is fascinating, and the idea that 100 pennies make a pound particularly so.

Of course, you can also introduce the idea of saving. Building up enough pennies to make a pound, or to buy a particular treat means understanding delayed gratification, which is vital to good money management in the future.

Even young children can also get used the idea of spending money. A pretend shop makes the real thing easy to understand.

7 to 11

Children steadily grow in confidence and skills during these years and can soon graduate to real shops. These are an adventure and although they may need some help at first, most soon grasp the idea of giving more and getting change.  It means taking maths skills up a level, and while theory is fine actively handling money cements that knowledge.

Children should be starting to make spending and saving choices based on their own needs and working towards financial goals. By introducing the concept of earned pocket money you can help demonstrate that money has value based on work, rather than magically appearing.

The idea that saving pocket money allows them to buy something special can reinforce the habit. It could also be time to introduce the idea of a savings account, where their money will earn interest.

This of course has an added benefit for relatives who are at a loss at Christmas and birthdays. A gift of cash is dull for younger children, but by the time they are ready for secondary school, it can become the ideal present.

11 plus

With the teenage years approaching children should be able to understand most of the concepts used in adult life. Things like currency exchange during the family holiday, and interest, whether on savings or charged on loans should be well within their understanding. Making a game of finding the best deals can help increase their familiarity with the practicalities.

Buying smaller items like accessories and games can often be left entirely to children at this stage. But be prepared for some surprising choices.


By the time children are young adults they should have all the skills they need for everyday money management, and it might be time to look at adult financial topics. There is a whole word of investment to discover, and with the savings habit hopefully ingrained, some will be keen to start looking at investments. Transferring some of their savings into a Junior ISA might be a simple way to get started.

Of course, there is a great deal more to explore in the world of money, and at Continuum, we can help. Subscribing them to our free award-winning newsletter could be a good place to start.

The value of investments can fall as well as rise and you may get back less than you invested.

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