Tips for teaching your children about money

Talking to your children or grandchildren about money from an early age can help create a lifetime of healthy financial habits. Here are some tips to help you introduce the idea of spending and saving – and how to avoid some common mistakes.

DO: Give them their own money early on if you can afford to.

If they’re lucky, they might receive gifts in the form of money from family and friends on birthdays and other celebrations. Counting and sorting coins can help make money a definitive concept, connecting it to the world around them. Try keeping cash to hand when you’re out with your little ones — letting them hand over coins when paying for an item can teach them about exchanging money for goods.

DO: Encourage them to save a little and often.

Once cash starts coming in – for birthdays, lost teeth, etc – it can be easier to introduce the concepts of spending and saving. Talk about the choices they can make with their money, whether it’s buying treats after school or saving for a toy they’ve been wanting. Suggest they do a bit of both, which is a good introduction to budgeting. Think about a pair of ‘spend and save’ jars instead of the classic piggy bank: one to dip into whenever they’d like and one for putting money away for something special.

DO: Let them see how you budget the family’s finances.

It can help to use relatable examples like an upcoming family holiday or suggest skipping the cinema to save money for something even more special? Or keep it simple and take them to the supermarket and explain how choosing some lower-cost products can help money go further.

DON’T: Pressure them to save it all.

Especially if it’s money they’ve earned themselves by doing chores. Allowing them to spend a bit here and there makes the whole experience of money more rewarding for them. And having control over what to buy is an important and exciting part of the learning process too.

DON’T: Discuss money when you’re stressed.

It’s important to avoid letting them witness arguments about money. This can make the topic more scary and could discourage them from discussing it with you later on. Try to keep complicated conversations about money as adult-only conversations.

DON’T: Underestimate your children or delay talking about money.

The idea is to get children comfortable with the subject of money by making it relatable and open for discussion. Children are perceptive — they’ll soon begin to realise the important role money plays in family life.

Despite the years of maths ahead for your child, schools rarely tackle the topics of money, budgeting and investing. The dos and don’ts outlined here are just a starting point to help get the conversation started. If you’d like to learn more about savings products designed for children, like a Junior ISA, then visit our Junior ISA page to find out more.

Please note that M&G only offer a stocks and shares Junior ISA. Junior ISA tax advantages depend on your individual circumstances and that Junior ISA tax rules may change in the future.

Please remember, that the value of your investment can go down as well as up so you might not get back the amount you put in.

The views expressed in this article should not be taken as a recommendation, advice or forecast. We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser.