For many, the first time we take on any financial responsibility is when we’re faced with a student overdraft at 18 with no financial education to prepare us. However, introducing money to children earlier can help them make better financial decisions later. Here’s how…
Why teach kids about personal finance?
Research shows that children start to build attitudes and habits towards saving and spending as early as five, and can be set by age seven.1 So introducing concepts such as saving can help them to build healthy financial habits early on, something that many adults find hard to pick up later in life.
Besides the practical benefits, teaching kids about money can also help them build better emotional relationships with money. As we grow, we pick up habits and social norms from the world around us. One social ‘rule’ that lots of us learn – particularly in the UK – is that we shouldn’t talk openly about money. However, talking about money can help adults feel less shame around their finances and help us communicate more effectively with family or partners. So the more we encourage children to talk about finances from a young age, the better their relationship with it will hopefully be.
3 simple ways to teach children about money
1. Let them earn their own money
One of the most effective ways to learn is by doing! In giving a child the responsibility of earning money of their own, they can learn how to manage it with your guidance. You could even encourage them to save a small portion of their savings to help them develop healthy financial habits early on.
2. Set savings goals
Introducing the concept of a savings goal can help children to understand the importance of saving regularly.
The ‘goal’ could be anything from a new toy to a packet of sweets. Work with them to work out how much they’ll need to save and how long it will take them to reach their goal. Encourage them to check in with their progress regularly.
3. Open a Junior ISA
A Junior ISA (JISA) is an investment account which a parent or guardian can open for a child aged under 18. While it may seem counterintuitive to open an investment account for someone still learning arithmetic, there’s research that shows it can lead to stronger financial capabilities in adulthood. In fact, there are multiple studies which found that owning a savings account as a child was associated with greater financial asset ownership, more savings and less debt, and better financial literacy as an adult.2
Opening a JISA for a child allows them to learn about the benefits and risks associated with investing under the careful supervision of an adult. Plus, it enables you to introduce complex ideas such as compound interest and the stock market.
How does the Moneybox JISA work?
The Moneybox JISA allows you to invest up to £9,000 per tax year for your child’s future – and it won’t impact your personal annual allowance of £20,000! Any parent or guardian can open a JISA for a child under the age of 18 as long as you’re both UK residents.
With a Moneybox JISA, you have access to lots of handy features and capabilities to help manage your JISA, including:
📨 Transfer other JISA accounts to Moneybox
📈 Earn 2.1% AER* (variable) on any money held as cash in your Moneybox Junior ISA, before investing it.
💷 Instant bank transfers
💰 Deposit, buy and sell using funds held as Available Cash
📱 Access a wide range of tracker funds
💸 Open JISAs for multiple children
Please note, only existing Moneybox customers can currently open a Moneybox JISA. If you’re not a Moneybox customer but wanted to open a Moneybox JISA, you could choose to download the app and open a different account first.
Learn more about how the Moneybox JISA works using the button below. 👇
Get your child off to a flying start 🚀
Ready to start investing for your child’s future? Open a Moneybox JISA in-app by heading to Accounts > Junior ISA.
1 Money and Pension Advice, Children and Young People Financial Capability Deep Dive: Parenting, April 2018
2 Money and Pension Advice, Vulnerable Children and Young People and Financial Capability: Literature Review, April 2018
Important to know
*% AER (annual equivalent rate) is the rate you will earn after a year, including compounding.
All investing should be regarded as long term (min. 5 years). The value of your investments can go up and down, and you may get back less than you invest.
