Part 1: Design challenge of introducing kids to money and finance

Getting back to what makes this such a real experience for me as a parent. 

My children are avid Minecraft enthusiasts who’ve discovered the world of Mods, purchased through the Microsoft store, which has shifted their perception of spending. The reward system with the money jar worked well because they could visibly track how much they’d saved and decide how to spend it. I loved seeing this in action, as they were learning to make decisions, whether at the supermarket calculating how to spend their money on ice cream, deciding which ones to buy, or figuring out if pooling their money would maximize their purchase. I’d stand at the end of the aisle, pretending to browse other items, while they worked it out.

The key was they were making informed decisions, like asking themselves, “How many ice-cream boxes can we buy if we put our money together?”

This is somewhat translated digitally when both of them choose Mods, but essentially they don’t DO the actual transaction, and don’t have a relationship with the amount being topped up. ‘Old money' - coins and notes - can't purchase Mods unless you make a bank deposit, which isn't exactly convenient with branch closures.

The digital process of entering in card details feels less like they’re learning the value of managing their finances. 

How can tools for children evolve alongside cashless systems to support financial education and then independence?

Reflecting on the learning process, I’ve been thinking about how I came to understand the value of money and when it truly felt tangible to me. By that, I mean the moment I realised money could be used in a way that would directly impact my life, for example driving lessons. For me, that defining moment came after I got my first job and I was determined to drive, or buy a sound system. 

I’ve been asking myself why financial literacy matters so much to me. Part of it stems from my family's history as refugees from Uganda in 1972. They were forced to leave behind their homes, businesses, a comfortable lifestyle—and even the mango tree in the garden—to face the challenge of survival in a new world. Their focus became rebuilding and pushing the next generation (me) through the education system to avoid the struggles they were going through. 

Writing this blog has made me reflect on this for the first time. It feels like they came from a place of stability, fell to the breadline, and worked tirelessly to rebuild. Now they’ve supported me in my education and my life has evolved and I want my children to understand both the reality of struggle and the importance of making thoughtful choices. I think this desire resonates with what many parents hope for their children: an awareness of life’s financial challenges and how to best arm them to navigate decisions wisely.

This seems to have become a key focus for me, not just through my own kids but also through my involvement with the Scouts group, where I volunteer. One of the activities the Cubs are currently working on is earning their Money Skills badge. As part of this, they’ll be tasked with a grocery shop with a budget of £5.00. It’s going to be fascinating to see how they approach this challenge and what choices they make!

The challenge we face today is figuring out how to teach children the value of money when they don’t see it being spent. With goods arriving at the door or instantly on their devices as if by magic, it’s harder for them to connect the dots between spending and the effort or resources behind it. This is akin to how we use contactless and just keep tapping away… because it’s so effortless. 

Money management varies widely based on financial knowledge, resources, goals, and habits, all shaped by factors like inflation, taxes, and the cost of living. The challenge lies in equipping the next generation to harness and apply financial knowledge. Ben Logan highlighted Lucy Kellaway’s FT article, "Buttered Toast for Hungry Minds" which discusses a Manchester school’s Free Breakfast scheme in partnership with Magic Breakfast. The article echoes similar concerns about improving financial literacy for young people. I recommend exploring the FT’s Financial Literacy and Inclusion Campaign. 

Could Online Banking and associated digital tools help to Bridge the Gap?

This blog is a three part series of essentially wanting children to have:

• Financial Literacy. Basic money concepts, skills, and habits that enable children to make informed financial decisions as they grow. Barclays has an interesting blog about Teaching children about money.
• Informed Decision making. Can children navigate through problem solving and making decisions when they don't have money? When shopping can they determine what might be best to get versus what they want? 
• Preparedness. The cost of living has impacted many households, and having grown up without much financial security, I understand how crucial it is to navigate life when you’re on the breadline—a reality many families are facing today.
• Timing & learning. When should we teach the next generation about concepts such as debt, credit, loans, products like BNPL which can incur interest?

Above all else, could we do a better job in preparing the next generation when it comes to financial literacy and independence?

There are many online propositions ranging from Go Henry, Revolut, and Rooster, to name but a few. In my next blog, I explore Rooster by NatWest and share how the application process went and the lessons I learned along the way. Stay tuned!

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