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Teach 7 to 10 year olds about money

Learning about spending and saving for your children

Your child will now have an understanding about money. They’ll also be able to see that money isn’t just coins and notes. To help develop their understanding, we’ve got some useful tips to build on their knowledge. This is based on what your child may be learning in school.

Lessons and tips for 7 to 8 year olds
 

1. Different ways to pay

Cash is easier for children to understand but they have probably seen you buy things with a card or a phone. Explain that there are other ways you can pay for things. Such as debit cards and credit cards.

Learn together – ways to pay

Talk about different ways you can pay for stuff. You may have various cards in your purse or wallet. Show them the different cards you have and explain when you might use them. You could also talk about other ways to pay.

  • Debit cards – take money out of your bank account.
  • Credit cards – you ‘borrow’ the money from a bank, which you pay back every month. This may cost you more in the end.
  • Loyalty cards – you can earn points on spending. You can then use these points to pay for things with that store.
  • Direct Debits and standing orders – these are payments set up to pay for regular bills and subscriptions.

2. How do you get money

Understanding that money doesn’t actually grow on trees and that you need to earn it, is an important life lesson. Explain how different jobs will pay different amounts. It may help them think about the type of job they might want to do in the future.

Learn together – let them earn some money

The best way to learn is to do it. Suggest that your child earns some money for jobs they can do around the house. It can be anything from unloading the dishwasher or folding the laundry. Maybe suggest that for bigger jobs, like washing the car, they can earn a little more.

3. Borrowing money

Your child will be able to understand that if they borrow something, they’ll need to give it back. Whether it’s a friend’s football or their colouring pens. Money is no different. Explain that you can borrow money if you don’t have enough, but it needs to be paid back. As an adult, this is likely to cost more as it’ll need to be paid back with interest charged. Borrowing can also cause money worries. It’s important to pay back the money you borrow by the terms agreed or you may get charged fees.

Learn together – the bank of mum and dad

If your child doesn’t have their own money, you probably feel like you are regularly being asked to hand over money for something. Next time they ask, suggest that you lend them money. Agree when they’ll need to repay it.

Suggest they do some jobs around the house so they can earn some money. They’ll then be able to repay you. Your child may decide that what they’ve asked for is not so important after all. Or, they might be happy to earn ‘their own’ money.

Lessons and tips for 9 to 10 year-olds

Your child will soon start getting swayed by advertising. Or pulled by peer pressure to get the latest trend in trainers or tech. Help your child understand the value of money. It’ll help them make smart decisions when buying something.
 

1. Value for money

Finding a good deal is a great skill to have. Help your child understand that you can pay different prices for the same item, in different places.

  • Shops sometimes charge different prices for the same item. Shop around to find the best price.
  • Consider the quality – sometimes it pays to spend a little more on a better quality item.
  • Think about ‘needs’ versus ‘wants’. Can you live without it or wait until it’s on sale?

Learn together – make the most of your money

Next time your child asks for something new, ask them how they plan to pay for it. Encourage them to shop around for the best deal. Ask them whether they could live without it or wait until it’s reduced. They may even find something they prefer, for less money. They’ll be a little more considerate if they’re spending their own money.

You can also suggest buying it second-hand. You could look at online selling pages together. They could get a better quality second-hand item for less than if it were new. It’s a great way to make your money go further.

2. Spending and saving

At this age, children are aware of advertising. Talk to your children about how it’s designed to encourage people to spend. Look at adverts together and talk about whether it’s making them want what’s advertised. Is it something that they would save up for? Do they think it’s worth the money?

Learn together – check out the ad’s!

When you’re watching TV together and an advert comes on, ask your child whether it’s making them want what they see. It could be advertising food delivery and making them want a takeaway or an ad for a new style of trainer.

Ask your child whether it is something that they’d want to spend their money on. Or whether it’s something they would want to save up for and buy later. By looking at adverts this way, it will get your child thinking about whether to spend or save. Also, whether it’s a ‘need’ or a ‘want’.

3. Interest on saving and borrowing

One way to encourage saving is to explain how interest can be a reward for saving. But, it can also be a charge on money that you borrow.

If you help your child understand how interest works, it will encourage them to save and see their money grow. It may also help them avoid extra costs in the future if they need to borrow money.

Learn together – how interest works

To help explain interest, you can use the Bank of England online interest calculator. It will show you how interest can add up over time. This can be a good thing if you are saving, but not so good if you are borrowing.

Here’s two examples;

  • Saving – if you save £100 with a bank that pays 5% interest in a year, you’ll earn £5 in interest. You’ll then have £105 at the end of the year.
  • Borrowing – if you borrow £100 with a bank that charges 5% interest a year, it’ll cost you £5 in interest. You’ll owe £5 more than you borrowed.

You can also earn interest on the interest. Let’s show you how it works.

You start with £100 and want to save for 2 years in a savings account that gives you 5% interest on your savings.

  • End of year 1 you’ll have £100, plus an extra £5 in interest earnt.
  • End of year 2 you’ll have your £100, £5 interest from year 1, £5 interest from year 2, plus 25p you have also earnt on the interest from year 1.

You now have £110.25 from the £100 you saved.

The young children lesson

Help your children understand how saving money can make their money grow.

If you do this now, they are more likely to become financially aware. Hopefully then having fewer debts in future life.

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