Although financial literacy has been part of the national curriculum since 2014, many schools don’t teach personal finance as standalone lessons.

According to research, only 33% of parents of primary school-age children report that their child is receiving enough financial education, while 36% of parents of secondary school-age children report the same. [1]
 
This means it’s up to parents and grandparents to teach children about money. So where should you start and how do you make it fun, interesting, and even profitable?

Here are five top tips to help the children in your life learn how to manage money.

1. Teach the basics while they’re young

When your children are old enough to learn that they shouldn’t put pennies in their mouths, introduce them to the idea of saving money in a jar.

Show them all the different coins and notes, along with your credit and bank cards, and tell stories about how you use them and what they can buy.

Set up an empty jar and start adding loose change to it. Make a game of adding money to the jar and watching it build up.
 
Once the pot is full, count the change and discuss what the money could buy – and let them decide what they want to spend it on.

Then, encourage them to continue the savings habit and talk about what they might afford next.

2. Explain the difference between wants and needs

Understanding wants and needs can help keep spending in check. Talk about how you decide what to buy at the supermarket and what you pass up.
 
Maybe you pick up some milk but skip the juice. Or you buy shampoo but pass on the nail polish. Ask what your child needs, and then ask them if they really need that thing or if they simply want it.

3. Create opportunities for them to earn extra pocket money

Assign household chores your children could help with and set an appropriate reward for each chore. For example:

• Tidying their bedroom: £1
• Weeding the garden: £2
• Helping to clean the bathroom: £5
• Washing the car: £10

As well as teaching about effort versus reward, they’ll be able to use the money they earn to top up their savings and buy their most-wanted item sooner.

4. Turn a trip to the bank into an event

When your children are old enough, upgrade the savings jar to a real bank account.

Make an event of it and help your child open their own savings account. This can be done online but, if possible, do it in a branch so your child can take part and see what’s involved.

Before you head out, involve them in getting the required ID documents ready. This will help them understand the importance of personal ID and address data, which are part and parcel of money management.

5. Make an investment and reveal the magic of compounding

Putting as little as £100 into a Stocks and Shares Junior ISA (JISA) will help your child see the value of the money fluctuate with the share performance.
 
By continuing to top it up regularly and investing across a broad range of companies, you could eventually save enough for university tuition fees or a deposit for their first home.

When a child is old enough to understand, gather their JISA statements and go through them together to see the effect that compounding has had on their money.

Get in touch

If you’d like to explore how we can help you teach your family important money lessons, please get in touch. Email info.wp@titanwh.com or call us on 0800 048 0150.

Please note

The information contained in this article is based on the opinion of Titan Wealth Planning and does not constitute financial advice or a recommendation for any investment or retirement strategy.
The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 
Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.