What To Teach Your Children About Money By Money Coach Talia Loderick

Talia Loderick is a Money Coach, based in Cardiff. Talia offers one-to-one coaching helping women understand their emotions and beliefs around money so they can improve their behaviour with money, feel better and be better with money.

Talia also delivers financial education workshops to 11-19-year-olds in schools, colleges and community groups, helping young people build lifelong money-management skills.

Hands up, were you given a financial education? By parents, guardians, teachers? 

On a practical level? 

On an emotional level?

I often pose this question when I give talks about money. I think it’s an important question to ask ourselves and reflect on. Because the unfortunate truth is that many of us were not taught how to manage money, how to understand our feelings about it, or how to talk about it. But every day we earn, we spend, we give, we receive, we borrow, we lend. 

Money impacts our lives daily. 

Not being taught how to manage our money – both on a practical and emotional level – leaves many of us feeling out of control with money, simply muddling through. But I know from conversations I’ve had that many of us want to do better – for ourselves and for the next generation. 

The importance of financial education

Financial education is key and it starts at home. It’s easy for negative attitudes and bad habits to be passed down generation by generation. Let’s break the cycle. 

It helps to look at money as part of the bigger picture. Start by thinking ‘how do I want to live my life?’ and how then ask yourself ‘how does money help me get there?’.

As a parent, you might want to ask yourself ‘what do I want my children to learn about money as they grow up?’. Your answer may be ‘I want my children grow up with a healthy attitude towards money’. 

That’s a great starting point.

Money habits set by age seven 

Research carried out in 2013 by the government-backed Money Advice Service found that adult money habits are set by the age of seven.  

Children will learn and absorb from your relationship with money, both consciously and subconsciously. 

Consequently, as a parent, how you manage money influences how your children will manage money as adults. 

Here are three key things you can do to help your children develop good money habits.

• Talk about money

• Introduce the language of choice

• Involve them in decision-making

Talk about money 

Helping your child understand and respect money from an early age will help them manage it better when they are adults. 

Talking about money with your children is a good starting point. This helps avoid making money a taboo subject. 

When you talk about money, be aware of the language you use about it around children.

Terms like ‘not enough’, ‘too much’ and ‘too little’ can really stick with young people and play out in their behaviour in adult life – whether it’s stockpiling money when they don’t need to spending money they can’t afford. Words matter. 

Introduce the language of choice

A phrase I like is: you can do anything but you can’t do everything. 

By introducing the language of choice you’re teaching your child that you choose what to spend your money on. Also, that you might spend less in one area so you can spend more in another. 

One exercise I like to do with young people in my financial education workshops is a supermarket shop. 

I’ll organise them into groups in the classroom – we don’t get to go to an actual supermarket unfortunately! – and give them a list of 10 items and a few minutes to estimate the price of each item and calculate the shopping basket total.  

We’ll then talk through what informed the prices they came up with and I’ll reveal the actual price of each item.

The discussions with young people around the price of each item is what makes this exercise a joy to deliver. For example, the shopping basket includes both supermarket own-brand cola AND name-brand Coca Cola. 

We’ll discuss why one is more expensive than the other, which one they would choose to buy and why. For those who prefer the pricier option, I’ll ask if they had less to spend in a given week would they go for the cheaper option or go without – and why. 

This whole exercise leads to engaging discussions around choice. That money is about making choices and that different people will make different choices and that’s okay. 

This exercise also illustrates that cheapest doesn’t mean best but neither does expensive – it’s about what you like and what you can afford.  

Involve them in decision-making

Involving your children with your financial decision-making reinforces that money is about choices and that money can help you achieve your goals. 

Consider involving your children in writing your shopping list of what’s needed and wanted for the home. In doing so, you’re involving them in the decision-making process and educating them on priorities and balancing needs versus wants. 

If you’re heading out in the car, you might ask them if they’re happy to park further away to save money. 

Bear in mind that saving for savings sake, while admirable, isn’t exactly motivating. It helps to explain to your children why you’re saving money – what you’re putting it towards. Setting family goals can help with this.

For example, if your family goal is to save up for a day out or a holiday, this allows you to explain that while you could buy the toy or treat that’s caught their eye, this will mean it takes that bit longer to save towards your family goal. You can then ask them what they’d prefer to do. 

The importance of pocket money

The more parents talk to their children about money and give them responsibility from an early age, the better children are at saving and planning for the future. 

Pocket money gives children the sense of managing their own money, whether they receive 50p or £5 a week. 

Some piggy banks have different compartments that categorise whether the money is to spend, save, gift, or invest. This shows children how to plan ahead. 

You can also help your children manage their money with digital budgeting apps that you load with money and monitor via your phone. 

Apps include Go Henry, Rooster Money, Osper and Nimbl. It’s worth noting these services do cost a few pounds a month to operate. 

You could help your children understand the benefit of interest on their savings by creating a reward scheme, such as 10p or more for every £1 that remains saved for a month or a quarter or a year. 

What to teach your child about money depending on their age

There’s a wealth of ideas and activities on what to teach your children about money on the Money Advice Service website. It’s a comprehensive resource broken down into age categories from three-year-olds right up to adult children.

Here is a brief summary of what to teach your children about money by age. 

Three and four: Counting and playing shop.

Five and six: Shopping trips help show them spending and saving.

Seven and eight: This is a good time to introduce pocket money.

Nine to 12: Talking about money with them when they’re becoming more independent is important in establishing good money habits children can take into adulthood.

Teenagers: This is a god age to give them financial responsibility. One way to do this is to talk to them about your financial responsibilities. Go over your household budget with them – take them through what comes in and what goes out every month. You could even let them take over the household budget for a week. 

Adult children: Your aim here is to empower, not enable. You can help your adult children become more financially independent and resilient by helping them stand on their own two feet. Even if they’re living at home to save money, list the way they can contribute to living expenses and tasks around the home. 

Find out more about Talia here: https://www.talialoderick.co.uk/