How to improve your children’s financial literacy

Financial literacy is a cornerstone of a stable future, and yet, This Is Money notes that 1 in 4 students said they left school with no formal financial education. This is despite One Family stating that 87% of teenagers actively discuss money and finances with their families.

My Money Week aims to change this disparity. From 9 – 13 June 2025, the annual initiative from Young Enterprise continued its work to educate children and young people about their financial wellbeing.

As the world of personal finance evolves, you may be looking for ways to help grow your children’s understanding of money and wealth.

Remember, you are your child’s first and most influential financial educator. So, it can be helpful to have a few handy financial tools in your back pocket.

Here are some useful options to help your children understand the value of money and improve their financial literacy.

Start open conversations about money with your children

Simply talking about money can be incredibly powerful. It teaches your children that financial discussions are not taboo, and that open communication is key to learning and resolving worries that arise.

For example, it could help to openly explain:

• Your financial decisions
• How you organise your household budget
• The feelings you experience when you make financially responsible decisions.

It’s important for children to know that there can be both negative and positive emotions associated with handling money, from stress and worry to joy and satisfaction.

Embrace physical cash to demystify the concept of earning money

In a world increasingly driven by digital transactions, children may not fully understand where money actually comes from.

Giving your children coins and notes to use when out and about could help them grasp the tangible nature of money. Not only that, but it could also support early counting skills and help with recognising value.

For older children, it can still be useful to give them physical cash, perhaps as part of their regular pocket money. They can then deposit these funds into their bank account, which helps support the notion that money doesn’t simply appear out of thin air.

Explain the difference between needs and wants

When discussing the difference between needs and wants, it can be particularly useful to provide examples. For instance:

• Eating nutritious food is a need, but ordering takeaway is a want.
• Buying clothes to replace worn-out staples is a need, but indulging in fast-fashion trends may be a want.
• Books for learning could be a need, while being the first to buy and play the latest video game is a want.

Explain to them that if they only have a finite amount of money, needs will often take priority.

This can also be a helpful way of introducing the concept of different types of savings. For example, you could show them your emergency fund to demonstrate the importance of prioritising financial wellbeing and explain what you would use it for.

Then, if you have a pot of money put aside for “nice-to-haves”, you can show your children that you can still indulge in wants while being financially responsible.

Include your children in appropriate spending activities

There’s plenty you can do to help your children learn about spending, but a hands-on way to do so might be including them in the next grocery shop.

As you go around the aisles, ask your children which two similar products are the better-value option. For example, one item may seem more expensive, but it may have a greater quantity or come with a quality guarantee. This can help your children develop reasoning skills and start to understand more about value.

If they’re old enough, you could also ask them to add up the shop as you go from aisle to aisle, using a calculator or by rounding up in their heads.

Use technology to enhance your children’s financial education

In an age where children are highly engaged with the digital world, introducing learning through apps could be particularly useful.

There are a variety of options to choose from, with many geared towards financial literacy.

Some platforms are designed specifically for children, such as:

• GoHenry, which helps your children learn to earn, save, and even invest.
• Natwest Rooster Money, which helps you keep track of how much your child has earned for chores or received in weekly pocket money.

Beyond these, there are plenty of reputable educational apps that can provide interactive and engaging ways for your children to learn about important financial concepts, including:

• Pigby’s Fair, a free app developed by Aardman and NatWest to teach children aged 5 to 11 about money management.
• MoneyPrep is an educational app designed to teach children about finances, including core maths concepts.

Here at PenLife, we believe that empowering the next generation with strong financial literacy is an investment in their future. If you’re looking for more guidance on your family’s financial journey, we’re here to help.

Get in touch

If you’re new to PenLife, we specialise in financial planning that transforms people’s lives. Talk to us today to find out more about how we can help you and your family secure a strong financial future.

If you’re an existing client, as always, we’re here if you or your family need to discuss anything.

Email us at enquiries@pen-life.co.uk, or call 01904 661140 to learn more.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.