How To Teach Your Children About Saving Money

With no prior financial knowledge, often it can be difficult for children to understand that there isn't an endless supply of money available every time they want to buy something which catches their imagination. It’s for this reason that it’s important to teach kids about money, including how it works, the value of it and how to spend it wisely and efficiently. 

Educating your children about the value of money is key to building their confidence with cash, teaches them how to manage their finances more effectively and helps them achieve financial stability. Those who learn about money management throughout childhood tend to be able to manage their finances more successfully later on in life. Liz Hunter, our Commercial Director here at Money Expert, shares her expert advice on how parents can teach their children about money from an early age. 

Start the Money Conversation Early

Children learn a lot about money from home. Talking openly about saving, spending, and budgeting can help them build confidence and understand financial responsibility. Avoid phrases like “retail therapy” or “I deserve this” – these can send the wrong message about spending.

Pocket Money: Pros and Cons

Pocket money can be a powerful way to teach children financial skills, whether through cash, apps, or junior bank accounts.

Benefits:

• Teaches the value of money in a cashless world
• Encourages budgeting and saving for bigger goals
• Helps kids learn moderation and independence

Risks:

• Too much money may reduce motivation to earn
• Comparisons with friends or siblings can cause tension
• Cash may be spent on unhealthy or risky purchases – apps like GoHenry or Rooster can help parents monitor spending

Teach Budgeting and Saving

Shopping trips, birthdays, or Christmas money are great opportunities to show kids how to budget. Explain the difference between “wants” and “needs” and encourage saving towards bigger goals. Setting up a savings account can help children learn the value of long-term planning.

Open a Bank Account

From age 11, children can open a current account, giving them more independence and a safer alternative to cash. Parents can still oversee spending while children learn to manage money responsibly.

Be a Role Model

Children copy what they see. Demonstrate good financial habits by sticking to budgets, saving for bigger purchases, and comparing costs. Involving children in shopping lists or explaining financial decisions helps them understand money in real life.

Consider Age, Goals and Education

What works best will depend on your child’s age, financial goals, and understanding of money. Younger children may benefit from savings accounts you help manage, while older children may be ready for more independence.

Financial education is one of the most valuable life skills you can give your child. By starting early, setting clear boundaries, and being a positive role model, you’ll help them develop strong money habits that last a lifetime.