Teach 3 to 6 year olds about money

Learning how money works for early years

This is a great first lesson to teach children at an early age. Start when you’re out and about by giving your child the money to hand over in a shop. It’ll help them see how to spend money.

Lessons and tips for 3 to 4 year olds

We have three lessons for 3 to 4 year-olds and some tips on what you can do to help build their understanding.

1. Understanding cash

Nowadays, we tend to use contactless instead of cash. But it’s important for children to learn about money.

Help them to:

  • see the differences between coins and notes. Help them to learn each of their values.
  • count and show them how pennies add up to pounds.
  • know that you need to look after your money and keep it safe.

Learn together – spot coins

Give your children some coins to play with.

  • Have fun by putting them in groups of shapes, colours or sizes.
  • Point out the different values, and which ones are worth more.

Coins can be a choking hazard so do not leave your child unattended with them.

2. Talk about where you spend money

At this age, children can see you spending money in lots of different places. You might be buying a drink in a café or doing a weekly shop in the supermarket. Talk to your child about how you’re spending money.

  • Ask them to choose between different things to buy.
  • Show them that once you’ve handed your money over for your shopping, the money has gone.

Learn together – pocket money

It doesn’t have to be a lot, but give your child a small amount of pocket money. When you are out together, help them work out what they can get for their money.

3. Spending money

At age 3 to 4, children start to understand that you can spend, save or give money away. It sounds simple, but you are showing your child how you use money. Spend what you can afford, keep some money for another day and you could have some left to share.

Learn together – saving

Using a piggy bank or money jar is a great way to learn about saving. Show your children that it’s a safe place for their money. If you help them to count their coins each week, they’ll see how their money can grow if they save and don’t spend it.

Lessons and tips for 5 to 6 year olds

Children soon start to grasp an understanding of how to use money. We have some lessons and practical tips on how you can start to get them into good habits.

1. Knowing how much money they have

Children will now be learning how to read, write, and count. If they have their own money, encourage them to make a note of what they get and what they spend. It’s simple maths that they’ll be able to do, with a little help.

If they don’t have their own money, you could play shop. Get some things out of your cupboard and use the money in your purse or wallet. It will help them to understand that you can only spend the money you have.

If your children keep track of their money, it also helps them to start to understand about saving money and this is a valuable life lesson.

Learn together – set a savings goal

Ask your child what they would like money for. Agree how much money they’ll need to save. Make a chart to mark off how much money they save. Tick off little milestones along the way.  

2. Needs versus wants

Help your children understand the difference between wanting something and needing something. It will help them to spend their money wisely.

  • ‘Needs’ are essentials – food, water and a roof over their heads.
  • ‘Wants’ are nice-to-have – for example, sweets, treats and ice-cream.
  • Talk about having to pay for the boring stuff like bills. It’s not exciting but you need to pay them. It will help your child understand how to manage what they spend.

Learn together – needs and wants

The next time you’re out in the supermarket, get your child to work out whether they think something is a ‘need’ or a ‘want’.

  • Your staples of milk, fruit and vegetables for example, are ‘needs’.
  • Treats like cakes, biscuits and crisps are more of a ‘want’.

3. Start saving

Explaining to your child that they can’t have everything they want is a good lesson to learn. Rather than buying something now, they could put away a little money and save instead. If they don’t spend it all on small things, they can save some money towards something bigger.

Encouraging a savings habit now will help them in later life. Explain how to use money in different ways: spending, saving or giving away money.

Learn together – make it fun

Help your children understand how you use money. Label three money jars: spending, saving and giving. If your child gets any money, ask them to divide it up across the three jars. They may put it all in the jar to save or split across all three, but let them pick. It’ll encourage them to think about how they’ll use it.

Empty jam jars are good to use because they can see how their money builds up.

The early years lesson

  • Once you’ve spent the money, it’s gone. You can’t spend it on something else until you’ve saved again.
  • ‘Wants’ are the nice-to-have things they could live without. ‘Needs’ are essentials to survive, like food, water and a home.

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