Ask Adam: Help! My child has just turned 5, is this a good time to start teaching him about money?

Ask Adam: Help! My child has just turned 5, is this a good time to start teaching him about money?

September 15, 2022

Dear Adam,

My parents didn’t really teach me good money habits when I was a child. I’m doing great, BUT I kind of wish I had some guidance on how to manage money when I was little. My child has just turned 5, is this a good age to start teaching children about money? If so, what would you recommend?

Thanks, Becky.

First off, I’m glad you’re doing great. As it turns out 5 years old is about the right time in your little one’s life to start teaching them about money. Particularly how to manage money.

You’re about to embark on an exciting journey with them. You'll inspire them with the knowledge that will last them a lifetime. But before we get ahead of ourselves let’s remember that every journey has a humble beginning.

Teaching our little ones how to manage money may feel like a daunting task, but it should actually be a lot of fun.

A child is always eager to learn because everything is new to them. Your little one's mind has reached a level where they can understand how things can play out over time.

Children learn by seeing and copying what others do around them. Through seeing what us parents do, our kids can pick up our good, as well as bad, money habits.

At 5, your kid is old enough to learn the basics of how money works. If your kid hasn’t been introduced to what money is, then a great way to do so is through play. You could start off by playing games such as money hide and seek. Get them to find coins around the house and at the end get them to count all the coins up, which they can then use to buy a treat. This not only teaches them the value of money and that it can be used to buy things, but you can link the element of finding the money to work and teach them about why mom and dad need to work to “find” money. 

You can also introduce them to the idea of ‘rewards’. You don’t have to give them a reward every time, but you can use it to encourage good behaviour. 

As that’s an age where kids like to test boundaries for example by wanting lots of things - like toys. But don’t worry, you can use your child’s enthusiasm for toys and begin talking to them about the cost of things. Even though you might feel like they’re still your little baby, 5-year-olds are old enough to learn that there is a reason why we can't simply buy every  they see in the shop. 

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Now is also the perfect time to start giving your little one pocket money. Or reward them for completing their chores. Doing this will help your little one learn the relationship between work and earning money. Not sure how to go about it? You could create a reward chart and stick it on your fridge. Keep track of the tasks they need to complete every day of the week whether that’s tidying their room or even brushing their teeth. Once they tick off all their tasks of the day you can reward them with a star. Then by the end of the week, depending on how many stars they have accumulated, they’ll be given a different amount of pocket money. This way you’re teaching them the value of having to work throughout the week to get their share of pocket money.

After having done that you can empower your little one even further by letting them decide how to spend their own money. A simple yet very effective way of instilling some confidence and good money habits.

Say your kid wants a toy that is £10, but you only give them £5 in pocket money every week. You use this to help them understand that they’ll need more money to buy the toy they want, or if they can buy a cheaper toy for £5. Help them understand that if they want the £10 toy they will need to save over 2 weeks to buy. This way they’ll learn the value of their hard working money and how to budget and save it over time.

At this point your child has two choices in front of them. A) they decide to buy a cheaper toy and get it right away or B) they can start saving up a share of their pocket money and wait till they have enough to buy the toy they want. 

By leaving this decision to your son or daughter, you’re empowering them and teaching them about trade-offs. They may not like it at first, but it’s an important part of the learning process.  It’s a simple, but effective way of installing some good money habits.

I've saved the most obvious tip for last. A piggy bank! This is by far one of the easiest ways to teach them how money doesn't grow on trees. Just pick your go-to, whether that’s a savings jar, a cup,a money box or a digital account for kids such as HyperJar, Nimbl or Rooster. Getting them a digital account allows them to save and by using a child bank card you can teach them that some money can’t be seen and that it lives in a bank, or to keep it simple, another person. Just remember you’ll need to wait until your kid turns 6 to open one. 

Kids learn by doing, so what better way than a piggy bank that will fill the gap between earning and spending? Your child will want to keep an eye on their piggy bank or bank card and will gain a sense of pride when they see how the money racks up inside it. And they’ll also learn the feeling of ‘loss’ when they see their piggy bank finally emptied. This will also encourage them to save it rather than spending it all in one go.

Once they receive their first piggy bank/ (or bank card when they're a little older), you can begin to teach them how many sweets and toys they can buy with the money they have. Just divide the whole saving, budgeting and spending into steps to make it easier for them. For example, tell them that if they want a toy for £30 and they earn £5 every week it will take them 6 weeks to get it. The best thing about this? By talking openly about money, your child will be learning about other things too. Such as the days of the week, using a calendar, and addition & subtraction. And also how all these things work together.

It’s also a great way to get them familiar with paying with plastic and get them to tap the contactless machine to pay for your weekly food shopping. Plus, that gives you a chance to explain the different value between coins, notes and plastic money.

Just gear up and be ready with answers for all their “Why’s”.

Then once they’re a bit more familiar with the concept of money, saving it and spending it you could also involve your kid when deciding what product you should buy at the shop for example. An easy way to do it is to just pick an item like cheese and ask them to choose which one they think you should buy. The more expensive one, which might taste better? Or the cheaper one which, whilst not as tasty, will still be fine? Being a parent is also about getting to know your child’s innate personality as they grow. You'll find it very amusing watching them mulling over which cheese to buy!

From chores to rewards, to piggy banks, to shopping lists and spending. There’s a natural flow to how you can teach your 5 year old about money. Try these simple ideas to build their confidence with handling money. 

Once they’ve understood what money is, you could also start talking about their longer term dreams. Involve them in your journey of investing for their future by logging into your Nosso app. Show them all those cute messages they’ve received from family and friends. And watch their little faces light up when they’ll recognise themselves in all those pictures!

Thank you so much for your question, Becky. It’s great you’re already thinking about your kid’s future with money. Please let me know how you get on!

Wishing you all the best,



This blog isn’t our advice, so please don’t change your plans or buy or sell any of your investments based on it. We don’t know your money situation, your plans for the future or how much experience you’ve got. If you’re unsure you should speak to a professional financial advisor. We’re an investment app, so your money is at risk and can go up or down.