💸 Children’s financial habits start to be formed at the age of 7. 40% of people who didn’t receive financial education have no savings at all. People who did receive financial education as a child could be £70,000 richer in retirement.

If you have kids in your life, you’ve probably wondered when it’s appropriate to start teaching them about money. How young is too young? How do you make them understand the true value of what it is, and appreciate that it takes hard work to earn it?

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the importance of financial education

• Kids today don't learn about money. They don't learn about money at school, and we tend to learn from our parents. Good money management is really a skill.

• There are some schools who absolutely excel and really put it into the curriculum, but there are many others that simply don't have the time.

• The chance to teach kids about money at an early age is huge, and it's being missed. There is a Cambridge University study that showed that the financial habits of children start to be formed at the age of seven.

• People who did not receive financial education as a child are substantially more likely to be unemployed or earning a lot less today than those who did. 40% of the people we surveyed who said they didn't have financial education as a child said they had no savings at all.

• If you look at the other side of the equation, people who said they did receive financial education as a child are 46% more likely to start a business than those who didn't.

• The people who did receive financial education as a child will be £70,000 richer in retirement — that's a real sea change in people's life outcomes.

• Prioritising financial education at a young age would inject an extra £7 billion into the UK economy every year.

• There's an African proverb that is well-used — it says it takes a village to bring up a child, and teaching financial literacy, money management, is no exception.

• Government has a role, schools have a role and parents have a role — as well as the industry. We all need to ensure that everybody, no matter what their background is, no matter what country they live in or school they go to, has access to financial education from a young age.

encouraging kids to understand money

• Gen Z and now the Gen Alpha that are coming through into the Go Henry customer base, and they will almost always choose to go cashless. Only 14% of all the money that went through that children earned in 2021 — which was £148,000,000 — only 14% of that was actually taken out at an ATM and spent in cash.

• Gen Z are often described as the first digital natives, but they really are the first cashless natives as well, so it's critical that they learn to manage their money.

• The way the app was built made sure that as you spend money, the child is notified, that the parent is notified. It's very visible that money has gone.

• If children try and spend outside the limits their parents have set, they'll get a little ping from GoHenry to say, you just tried to spend 2.99 at Tesco's, but you've already hit your weekly spend allowance, or whatever the limit is that the parents set.

• Parents need to make that judgement call about when they feel is best for their own children, to talk about money, but generally the best idea is to do it as early as possible. It doesn't mean you need to start talking about compound interest with a six-year-old.

• If you can start having conversations in your house about money, it can be made fun. You can involve them in the supermarket, in helping you find the best deal, or even giving your kids pocket money. Again, it doesn't have to be a large amount of money, even if you only give them 20p.

• If you let them make the decisions on how they spend that, it is incredible how much they learn. Whether they decide they're going to spend it all on sweets, or they're going to save it up for a period of time and buy a magazine, all of that is teaching them to be confident in making decisions around money.

money behaviours and open conversations

• Children often get different amounts of pocket money, or none at all — the main thing here is to have open conversations about money at home in an age appropriate way.

• If you can explain to them and involve them in some of the decisions about spending money, it will be incredibly empowering.

• It's also really important to explain the difference between needs and wants, which again is a very simple concept, but we need food to eat, we might want the latest pair of trainers. That's a really simple example, but it's understanding and involving them in decisions that the family may need to make.

• The simplest piece of advice is give them some money, however little, so that they can make their own decisions about how to spend it. This really is the start of their money management journey and will help them learn around budgeting saving and spending responsibly.

• It's better to make a 20 pound mistake age seven than a 2,000 pound mistake aged 27. If you give your child some money and they blow it all and then tomorrow they can't do something they wanted to do because they spent all their money — that's tough, but it's a great lesson.

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You can follow and connect with Louise at:

• LinkedIn: Louise Hill

• Website: gohenry.co.uk

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