How to talk to five and six-year-olds about money

By around five and six, children are starting to understand and question money-related basics.

They’ll be able to understand that:

• different coins have different values
• pennies lead to pounds
• money needs to be kept safe, so they don’t lose it and others don’t take it
• losing money can be upsetting
• saving money helps them buy items they want
• some money can’t be seen, such as money in the bank
• they can do things to ‘earn’ money, such as being good or helping around the house
• there’s a difference between ‘needs’ and ‘wants’.

Now is a good time to make the most of their growing understanding of money.

Giving a child a money box or piggy bank provides them with a safe place to keep, and save, their money.

It’s a good idea to make sure children have a safe place to keep money. And to talk about why it’s important to keep money safe and how you do it.

Many five and six-year-olds are starting to understand that you sometimes have to save money for things you want.

They might still get frustrated about waiting for what they want. But learning to save money now help them learn to be patient.

Try this savings activity:

• Choose – ask them if there’s something they would like to save for that the whole family can enjoy (perhaps a game or a trip to the cinema).
• Visualise the goal – ask them to draw a picture of what’s being saved for. This is the goal and will help motivate and keep them on track.
• Problem-solve – together, come up with ideas to save money. For example, turning off lights or buying fewer items.
• Visualise saving – ask them to draw these savings ideas around their previous picture of the goal.
• Act – let them look after the savings in their own money box or piggy bank. If the goal is expensive, take it to the bank with them. Then watch the total grow online or via statements.
• Enjoy – when you’ve saved enough, enjoy your family treat.
• Praise – thank them for helping make this happen!

There are lots of fun ways you can help children enjoy saving:

• They’re ready to understand the concept of helping out around the house for money.
• Swap stars or sticker rewards for pennies
• Have penny hunts – just like Easter egg hunts, but healthier!

Five and six-year-olds learn a lot from watching and listening. Talk about money and show them how it’s used – at home and at the shops.

Shopping trips help show them spending and saving.

Before you go shopping, try these ideas to involve them prepare to shop:

• Many children love a challenge — can they help you save money? Make a list with them and have them help you stick to it.
• Talk about needs (such as food for dinner) versus wants (like treats).
• Talk about the value of money — what can £1 buy? £5? £10?
• Set a budget for a part of your food shopping that they’re especially interested in. For example, things for their school packed lunch, or foods they enjoy.

As you shop, help them get used to making decisions about what to spend money on:

• Show them that some packages are bright and colourful and cost more, while others might be dull and less fun. But what’s inside is often the same and can cost less.
• Show them groups of items that cost the same in total and offer a trade-off between different products. For example, a small punnet of blueberries and five bananas or a large punnet of grapes and three bananas.
• Allow them to choose different elements of a picnic lunch with a price limit.

It’s normal for five and six-year-olds to want things they see. They’re starting to learn the difference between needs and wants, but still don’t fully understand it.

In fact, many children may pester more at this age. You can use these ‘wants’ to teach them the skills of saving, negotiation and that, no, sometimes they can’t have what they want.

Here are some tips:

• Plan – if you’re going to a toy shop, plan ahead. Explain beforehand what you’re buying and why.
• Listen – allow them to feel heard by giving them a list of things they can’t have now but might want for birthdays or holidays.
• Explain – instead of just saying no, explain why. Explaining that we have money for what we need (such as food and heating) but not wants or treats helps them understand the choices adults must make about money.
• Stick to your word – saying no and sticking to it helps them learn self-control, understand the difference between needs and wants, and to save for what they want.

Financial education is taught as part of the secondary national curriculum in England, and the national primary and secondary curriculum in Wales, Scotland and Northern Ireland.