Save, make, understand money


BLOG: How to build healthy financial habits for children now to ensure a prosperous future

BLOG: How to build healthy financial habits for children now to ensure a prosperous future
Your Money
Written By:
Your Money

Was Aristotle correct when he said: “Give me a child until he is seven and I will show you the man”? A University of Cambridge study found that what children learn about budgeting, saving and delayed gratification by this age will largely determine their financial capabilities as they grow up.

How to manage money isn’t always included in our education or upbringing. In fact, a Financial Times survey in 2021 found that 90% of people in England felt they’d learnt “nothing at all” or “not very much” about finance at school. And this financial literacy gap can cause problems later on in life.

As soon as a child reaches the age of 18, they are suddenly eligible for all sorts of financial products like credit cards, student loans and overdrafts.

These services can be really useful, but understanding how they operate is key to fostering a positive relationship with money. Maintaining a good understanding of financial products can contribute to a healthy credit score, access to more affordable financial services and products, and avoids higher-cost alternatives.

That’s why it’s so important for children to learn good and healthy financial habits from an early age. The sooner we begin nurturing these habits, the more empowered and confident young people will be in managing their finances, making sure they get the best possible start in their financial life.

How to give children a head start in managing money

Teaching children to be confident in handling money is vital for avoiding financial challenges in the future, and although it may seem difficult, the key is to introduce an element of fun.

By incorporating practical examples that align with typical childhood activities involving money, we can make the learning experience enjoyable and positively shape their financial understanding.

Good financial habits for kids can be taught in many ways:

  • How to make a budget for your pocket money and income
  • Sticking to it so you can build your savings and buy the things you want
  • Learning to live within your means


It’s important for parents and caregivers to openly discuss money with their children and actively involve them in real-life financial situations. Look for opportunities to engage, such as handling bills at a restaurant or during your weekly grocery shopping.

Provide children a view of the transactions that you’re making to help them build familiarity with the process. Show them that things cost money, show them where the money you use comes from, how your card links to your bank account, and let them see how much things cost. It might seem obvious, but it’s important they understand financial accountability.

Let them use their own money. Give your children pocket money and encourage them to set a savings goal for something they want – like a toy, clothing or console game.

Create a simple budget with them so they can see how long it will take to get enough money together. This way, they can see how savings grow, while safely discovering the fundamentals of money handling at home.

All of these experiences can instil positive values and practical understanding, shaping a happier, healthier relationship with money.

Laying the foundations of healthy habits

Of course, many financial services like credit cards are only available to those aged 18 and over. But today, there are several prepaid cards for children that can be protected with parental controls and in-app learning to help kids build their financial knowledge.

These are great for introducing children to using payment cards responsibly, enabling them to view how much money they have available and where they’ve spent it. Prepaid cards give young people a degree of financial independence while keeping them in a safe space to explore paying for things on a card before they get their hands on a real credit card (and the line of credit attached to it). They also offer parents and caregivers an opportunity to explain how bank statements, overdrafts, credit scores and reports, and high-interest debt work.

It’s often the case that young people have no idea what credit is until it’s being offered to them. So, it’s a good idea in general to make children familiar with credit scores before they turn 18 – that way they have a good understanding of what impact their decisions will have on their financial future.

Getting it right early can save them thousands of pounds on credit cards, loans, mortgages and other products when the time comes for them to apply – not to mention a whole lot of time. If you are happy for your young dependant to see your credit history, why not get them interested in how it works by showing them your credit score?

No matter which way you choose to teach young people about handling money, the most essential tips for them to understand include:

  • How important it is not to spend beyond their means
  • Why making timely repayments is a good thing
  • How financial wellbeing can affect the body and mind too

Why financial wellbeing matters

What do we mean when we talk about financial wellbeing? From our careers to our relationships, money affects all sorts of things in life, and it can affect how we feel about ourselves. It’s important for young people to recognise that money and emotions are deeply connected.

When we feel like we have enough money to cover the basics – and enough to cover emergencies and the things we enjoy – money can help us to feel safe and secure. On the other hand, when money is tight or if we’re having a tough time financially, it can sometimes feel like money is affecting our overall wellbeing. Money can make us feel really worried, uncomfortable, anxious, or even guilty.

For most of us, using spending to manage our emotions isn’t a particularly sustainable habit. It can have negative consequences if you often find yourself dipping into your overdraft or using credit cards to cover spur-of-the-moment purchases.

Providing children with the awareness of how emotions can influence spending decisions, and teaching them to recognise and manage these emotions, is a powerful tool for ensuring their money is wisely spent and lasts longer.

Helping them set financial goals provides motivation, making it easier for them to decide whether to spend their money today or save it for something they want in the future.

At Loqbox, we know that when people are empowered with financial literacy, they’ll have the knowledge, tools, and healthy money habits to move forward in their financial journeys with confidence.

By instilling financial literacy in young people from an early age, we empower them to feel confident and in control of their understanding of money. This foundational knowledge not only builds their confidence, but also sets them on a path to navigate and make money work for them as they grow and mature.

Tom Eyre is co-founder and co-CEO of Loqbox