Teaching money to your kids – the fun way

teaching money

teaching moneyWith no one teaching money to us, we usually learn through painful mistakes. Help your children learn some of the lessons properly and early, without any pain. Well, not much.


Before giving your children their pocket money, talk about the various things they’d like to buy and how long they’ll need to save for. Get them thinking about how much they want the bigger items and whether they’re prepared to wait.

Even as your child gets older and can do the maths, keep discussing what they’d like to save for, so that they learn to routinely think about saving patiently.

Try not to do this in the run-up to their birthday or Christmas, since they’ll only learn to expect you to buy the bigger items for them.


When teaching money to children, the most important lesson is that, when they borrow for toys, sweets and other fun things, they’ll be able to afford less fun things for the rest of their lives.

That means not just while they’re paying the debt off, and not even just while they’re children – but throughout their whole lives, even when they are old! Which is aaaaages away.

Although borrowing means children can buy more fun things immediately, if they don’t borrow, they’ll catch up, and thereafter be able to buy more things sooner.

Teach this to your children by offering them a loan. To do this, after you’ve talked about the different things they want to buy, offer to give them the money now for the most expensive item, but say you won’t pay them any pocket money until the debt’s repaid.

Not only that, but you’ll dock an additional month or six weeks’ pocket money. That’s the ‘interest’ on the debt.

Physically show them what they’ll pay using the stack of coins/notes that is the pocket money they won’t be receiving. Talk about what they could buy in that time, on top of the most expensive item, if they’re patient.

Regardless of their decision, remind them after the period what they would have got if they had chosen the alternative. Hopefully, your guidance will have steered them clear of the hard lesson, but it’s better they have that now.

Repeat this exercise every now and then until you think it’s been drilled into them for adulthood.


Offer to insure your children’s toys. Say that, for 5% of their weekly pocket money, if a toy breaks, you’ll replace it immediately. You could exclude items that are just too expensive for you. Insurers do, after all.

If they reject the offer, or stop paying their premiums, they’ll learn their lesson the hard way eventually. Remind them about your offer.

If they pay their premiums, they’ll eventually get a new toy and see the benefits the positive way. Try to get them to choose this way!

Adjust the premiums up or down each year depending on their claims history, and explain why you’re doing it. This won’t just teach them about insurance, but it’ll encourage them to be careful with their toys in order to earn cheaper premiums too!

These are just some ideas on how to go about teaching money to your kids. We’d love to hear more ideas or tried and tested methods – let us know via the comments box below.