How to talk to your children about money (at any age)

Times

06-05-2025

Perhaps it is a cliché, but teenagers in the UK are really not very good with their money. More than half say they do not understand how to budget and two fifths are unsure how to save money, according to research by the wealth management firm Moneyfarm.
Some even believed that a starting salary after university might be as high as £236,000 (in reality the average graduate salary is between £35,000 and £40,000). It can be tricky for parents to know how to close this gap in financial literacy — but it is worth the effort.
The government's Money and Pensions Service says that children and young people who are taught about money are more confident in managing their finances and likely to become active savers later in life. Since money management skills begin developing between ages three and seven, it is important to start early.
Starting young
For young children, keep lessons about finances simple. Use physical coins and notes to explain what money is, where it comes from and how it works.
'Cash is used less, but it's important that children don't just see money as a beep between a phone or card and machine,' said Lesley Thomas, founder of the Money Confidence Academy.
Introducing pocket money for simple chores around the house can help them understand that money does not grow on trees. And letting them decide how to spend it shows that money is not infinite.
You might give your children 50p each evening if they put away their toys before bedtime. Each night put the 50p in a jar or mark a sticker chart. By Sunday they'll have £3.50, which they can spend as they choose.
Sarah Coles from the investment platform Hargreaves Lansdown said: 'Let them make terrible decisions. It's only when they've spent their pocket money on a magazine that entertains them for two minutes that they'll realise it wasn't the best way to spend their cash.'
When your children are a little older, help them open a bank account. You can pay their pocket money into it and look at the statements together as a mini lesson.
Kamilah Hale clearly remembers opening her first bank account. She was seven but can still picture walking into the branch and sitting at the table while staff gathered the documents.
'I had a lot of family abroad and would be sent money for Christmases and birthdays, so my mum said we needed to open an account and talked to me about interest,' said Hale, now 36, from Bromley in south London.
It was one of many money lessons she remembers. Hale now sees these moments as key to becoming a committed saver and financially independent — she bought a property on her own at 28 and paid off the mortgage by 35.
Hale, the founder of a tutoring company called Kin Learning, said there was an unspoken rule that if an item was not a gift for Christmas or a birthday, and it was a want not a need, then she had to buy it herself. It made her think carefully about how much she wanted something and what it was worth.
'By the time I was 11 I was looking at my statements and seeing how much 'free money' I had. When I was 12 I bought my first mobile phone and was responsible for paying the credit on it,' she said.
At university Hale was already saving for a house deposit, working part-time and budgeting carefully. Over a decade she saved £70,000 and bought a flat in Bromley aged 28. She overpaid her mortgage every month and started paying off larger chunks once rates rose in 2022. Last year she became mortgage-free.
'It all comes from the way I was taught and raised,' said Hale. 'The downside is that when I want to splurge on something I find it really hard. Now the mortgage has been paid off, I'm trying to loosen up a little.'
Talking with teenagers
Appropriate topics for teenagers include budgeting basics, savings accounts and online spending, such as subscriptions, in-app purchases and scams. You can also introduce longer-term saving goals, like a phone or concert tickets.
Kamalyn Kaur, a psychotherapist, suggests getting started by asking for their opinion on financial decisions. She said: 'Let them know you have money for this or that, and ask them which is more important. If you're planning a holiday, you could tell them you have the money for four days at Disneyland or two weeks in Spain.
'This shows that there isn't an infinite amount of money, and that different things cost different amounts.'
Estelle Keeber does this with her two teenage sons, aged 14 and 16. Most recently the topic was television — she doesn't pay for live TV, which means the boys can have streaming services instead.
'They understand that the money we save from not paying for Sky or similar means they can have Netflix,' she said.
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Keeber, 42, from Leicestershire, wants her sons to be self-reliant. They help around the house but earn more pocket money for certain chores. When energy bills rose, she explained that the cost of living might increase but that incomes don't always rise to match it.
'My youngest loves to run a full bath every day, so I told him how much that costs and that he probably didn't need to do it daily,' said Keeber, a social media expert who runs a company called Immortal Monkey.
When her 14-year-old needed money for a trip, he asked neighbours if they needed gardening services. After weeks of mowing lawns and weeding, he had saved more than £300.
'They're old enough now that I can relate things to the real world. My youngest loves to save, my eldest often taps him up for a £10 loan. When the youngest pointed out that he wasn't getting anything from the deal, we talked about interest and how that works with banks,' Keeber said.
Teenagers often face peer pressure when it comes to spending, so it is important to talk to them about the risks of overspending and how budgeting can help them resist an urge to splurge.
Louise Hill, the founder of the children's finance app GoHenry, said: 'I like the save first, spend later principle — it's a good way to remind your child that saving now can drastically increase their money in the future.'
At university
When your child leaves home they will face real-life financial consequences — possibly for the first time in their lives.
Coles said: 'Talk to them about budgeting. Drawing up a budget is boring, but having money at the end of the month isn't.'
Make the budget engaging by chatting about their new life as you build it. Suggest setting up a separate account for bills and essentials. Since maintenance loans are paid three times a year, work out how much to transfer at the start of each term.
• How to talk to your kids about money — Deborah Meaden's advice
Have a serious discussion about debt. Lisa Davis, from the Money and Pensions Service, recommends explaining credit scores and how debt decisions now can affect their ability to borrow in the future. She said: 'As students it's easy to dip into your overdraft, but it's a habit best avoided early.'
If you have been saving into a Junior Isa, this is likely to be when they will access it — use this as an opportunity to show how the money has grown and to answer any questions about investing or the stock market.
Young adulthood … and beyond
Once your children are in their late twenties or early thirties you will probably talk less about daily budgeting and more about long-term planning and wealth building.
'This is where decisions start to really shape their financial future,' said Thomas. 'Pensions, mortgages, credit scores, insurance — they all need to be part of the conversation. And mindset matters too. A lot of adults feel 'bad with money', but conversations now can make the difference between financial stress and strength.'
Ask about their workplace pension — can they afford to contribute more? The default rate may not build a large enough pot for retirement. If they're saving for a home, discuss options for the deposit.
Sharing your own experiences, including financial mistakes, can make a huge difference to how your child feels about money and head off any feelings they may have of guilt. Emphasise the importance of having an emergency fund and the risks of living hand to mouth.
Adult children may not be particularly grateful for their parents asking questions about their finances — you might try recommending a podcast or book on money and finances so that the advice does not come directly from you. But, however awkward, these conversations are worth having.
'Silence leaves space for confusion, shame or false beliefs picked up from social media or peers,' said Thomas. 'If we don't teach them, someone else will.'