Building Financial Foundations Key Money Skills to Teach Children

Teaching children about money from a young age is crucial for setting them up for financial success later in life. By introducing basic money concepts and skills, parents can help children develop responsible money habits and understand how to manage finances. Today, we will scrutinise some of the key money lessons that parents, including foster carers, should focus on with children.

Discussing Family Spending

One of the most important things parents can do is openly discuss how money is earned and spent in the family. Children are naturally curious, so explaining where money comes from and how it is budgeted helps demystify finances. For foster carers, who are paid an allowance to care for children in need, it is useful to explain roughly how much foster carers get paid and what this money goes towards. Foster carers can explain how they track expenses, create a budget, and make responsible spending decisions with the fostering allowance.

Earning Money

Once children understand where money comes from, they can learn about how to earn it. Paying children small amounts for doing extra chores around the house introduces the concept of being paid for work. As children get older, topics like part-time jobs, entrepreneurship, and saving for larger goals like university can be discussed. The key is teaching children the relationship between working and earning money that can then be used to buy things they want.

Needs vs. Wants

A third important money lesson is differentiating between needs and wants. Young children may expect to get every toy or treat they ask for. Explaining that some things are necessities, like food and clothes, while others are just ‘wants’ teaches children to spend wisely. Going shopping together and setting budgets helps reinforce this lesson.

Saving and Budgeting

Once children start earning and receiving money gifts, parents can teach basic saving and budgeting. Having separate jars for spending, short-term savings, and long-term savings gives a visual for how to divide money. When going shopping or making purchases, setting a budget and sticking to it demonstrates living within your means. Older children can learn to track expenses to inform future budgets. These practical lessons prepare children to manage their own finances.

Being Generous

Equally important is teaching children about generosity and giving. Whether through volunteering, donating toys they’ve outgrown, or giving money to charity, children should learn that money can also be used to help others. This teaches valuable empathy and social responsibility. Foster carers can share how a portion of the fostering allowance is used to give the child experiences and activities that support their development.

Starting money conversations early and teaching core skills sets children up for financial literacy and responsibility. From discussing family spending to budgeting and giving, parents play an important role. What children learn about money in childhood will form the foundation for how they manage, save, and spend as adults. By making finances an open topic, parents and foster carers can provide the knowledge children need to build strong financial foundations.