Teaching kids about personal finance: Top 10 tips to get started

Some 60pc of Irish consumers are saving money consistently and nearly 70pc maintain a spending budget. That’s according to research from digital bank bunq, conducted in February 2024. So, while it’s clear that Irish people are planning for the future financially, what about our children?

Children as young as three can understand basic financial concepts such as spending and saving, so parents can take advantage of everyday activities to teach children healthy financial habits from a young age. With the right guidance, children can develop good money management habits that will benefit them for the rest of their lives.

Here are the top 10 tips for teaching kids about personal finance:

1 Start early

The earlier you start, the better. This can be done in really simple ways, for example, when you go grocery shopping, show your child how you compare prices to save money, or how you use money-off coupons to bring your shopping bill down.

2 Use real-life examples

It’s good to teach children about money in the context of their own lives. For instance, you can use their pocket money to teach them about saving, spending, and budgeting. You can also show them your monthly bills and how you manage to pay them on time.

3 Set financial goals

54pc of Irish people cite longterm financial goals as one of their top priorities for managing their money. Encourage your child to set a savings goal such as saving up for a new toy or a special event. Talk to them about the importance of saving money and how it can help them achieve their goals.

4 Open a bank account

Opening a bank account for your child can help them learn how to manage money. Many banks offer accounts specifically designed for children, with features such as no fees, and parental controls.

5 Teach the value of saving

Encourage your child to save a portion of their pocket money or earnings from chores each week. Explain to them how their savings can grow over time with compound interest.

6 Explain the difference between needs and wants

Explain to your child that needs, such as food and shelter, come before wants, such as toys and entertainment. You can use real-life examples to show them how to prioritise their spending.

7 Teach budgeting

Research shows that nearly 70pc of Irish people maintain a spending budget, which is great news. This is a vital financial skill that your child will need as they grow up. Teach them how to create a budget and stick to it, encouraging them to track their expenses and adjust their budget as needed.

8 Teach the dangers of debt

This can help your child avoid financial trouble in the future. Explain to them how interest works and how it can make debt grow quickly. Encourage them to only borrow money when necessary and to pay off debts as soon as possible.

9 Make it fun

Learning about personal finance doesn’t have to be boring. You can make it fun by using games and activities, such as playing ‘shop’ with your child, using pretend money to teach them about buying and selling. Online resources, such as videos and apps, can also make learning more engaging.

10 Lead by example

Most importantly of all, set a good example for them to follow. Show your child how you manage your money responsibly, such as saving regularly and paying bills on time. You could involve them in some financial decisions, such as planning a family budget, and encourage them to ask questions. It’s important to answer them honestly and in a way that they will understand.

With the right approach you can help your child develop a better understanding of personal finance and build their confidence in managing money.