Metis AM
From teaching children to be kind to showing them how to load a dishwasher, there are many ways you may be preparing the young people in your life for adulthood.
But one area that often goes overlooked is personal finance.
A survey cited by UK parliament found that just 41% of young adult respondents were considered financially literate in the UK. And with 61% saying they don’t recall receiving financial education at school, it’s not hard to see why many young adults struggle with managing their own wealth.
While initiatives are underway to improve financial education in the classroom, with a new statutory curriculum expected to be rolled out from 2028, teaching children about money at home can be hugely beneficial in developing their financial awareness.
Not only can this help young people develop strong wealth management skills to stand them in good stead for adulthood, but it can also help foster positive attitudes towards money.
Keep reading to explore how you can support the next generation to develop their financial knowledge and build a solid foundation for a financially stable future.
Start your child’s financial education early
Early experiences with money can shape financial behaviour and attitudes later in life. In fact, research cited by Red Star Education found that money habits are usually formed by age seven.
Of course, it might be unrealistic to teach your toddler about compound investment returns. But you can help them get to grips with the basics of what money is and how it is used from as young as three.
Playing shop with a toy cash register and pretend money can be a great way to introduce preschool children to the concept of money. At a basic level, it tangibly demonstrates that money can be exchanged for goods in a way that might not be clear from watching adults tap a card at the till.
As your child grows, you can gradually introduce them to more complex financial concepts such as tax, interest, and inflation. By getting started early, you could help foster positive money habits through greater financial awareness.
Use pocket money to teach them about saving and spending
Typically, children learn to count money in school by age seven or eight.
Around this age, you might choose to start giving your child pocket money regularly. Some parents may opt to pay an allowance in exchange for their child doing basic chores, which can help them appreciate that money is earned.
However you choose to manage pocket money, it’s often worth helping your child decide how to use it. This can be a good opportunity to teach them about saving, such as with a piggy bank or a children’s bank account.
By helping them choose what to spend their money on, you can also teach them about budgeting. For example, you might explain that making an impulse purchase today could mean they won’t be able to buy something they particularly want later.
This can also be a good time to explain the difference between wants and needs, helping them learn to prioritise their purchases.
Play games that incorporate financial lessons
Even when your children become too old to play shop, you can still use games to help teach them about finances.
One of the most well-known examples is Monopoly. Players can learn about concepts such as spending and budgeting, managing cash flow, paying taxes, and the importance of having an emergency fund for unexpected expenses.
There is a range of games that can help teach older children the fundamentals of personal finance, from board games like The Game of Life and Pay Day to video games such as The Sims and House Flipper. There are even some that simulate the stock market, taking their financial education to the next level.
By playing these games with your children, you can help instil key financial principles without them feeling like they’re in a lesson. They can make mistakes, learn from them, and discuss them with you – all while having fun.
Include them in your own finances and talk to them about your experiences
Letting your children get involved with the family finances can help them see how the principles they are learning play out in the real world.
For younger children, even taking them shopping can help them learn to make purchasing decisions and keep to a budget.
As your children approach adulthood, you might talk them through your investments, pension, or mortgage to help them learn how it all works and why it’s important.
In some cases, you might not feel comfortable sharing such detailed information about your finances. Just talking to your children about your own experiences with money, both positive and negative, can help develop their financial literacy. That way, you can share the lessons you’ve learned along the way, without needing to divulge specific figures.
Get in touch
Email enquiries@metiswealth.co.uk or call 0345 450 5670 today to find out what we can do for you.
Please note
This article is for general information only and does not constitute advice. The information is aimed at individuals only.
All information is correct at the time of writing and is subject to change in the future.
Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.
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.