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How to teach children about money – plus 4 investment ideas

We share our top five tips to teach children about money and offer one fund idea and three share ideas to get started.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

All information is correct as of 30 April 2023 unless otherwise stated.

Anyone who’s tried to teach their children the purpose of the laundry bin, coat hooks or the dishwasher knows it’s not easy to pass on your knowledge. But there are five underlying principles that can help enormously when you’re trying to introduce them to money matters.

See our investment ideas for children

1. Start while they’re young

Even during the pre-school years, you can consider games like pretend shops and restaurants. They can get used to handling and recognising money, and they can have a go at counting out coins too.

You can also talk to them about the cost of things, and introduce them to the idea of some things being more expensive than others.

2. Teach them to prioritise

Sensible spending and saving comes down to being able to prioritise, and the best way to help children develop these skills is through pocket money. This can start from the beginning of primary school, and you can build gradually, by increasing the weekly sum, and giving them more expenses to cover.

By the time they’re teenagers they can have an allowance that will need to be managed carefully to cover everything they want – which will help prepare them for managing their own budget.

They’ll make mistakes, and it will be tempting to rush in and pick up the pieces. But try to give them space to learn from their mistakes while the stakes are relatively low.

3. Introduce the idea of saving

As they move through primary school you can encourage them to set short-term savings goals. If they’re struggling to put money aside, you might agree to match what they save.

From the age of seven your child can open and manage a savings account, which can be a useful way for them to understand the power of regular saving.

4. Give them a stake

Some parents prefer to save in their own name on behalf of the child, which gives them control. It can make an awful lot of sense if you’re saving for something specific. However, the big advantage of handing it over to the child is that it builds a sense of ownership and gives them experience.

Again, they might make some poor spending choices, but this in itself can be a useful learning experience. And as long as they’re making mistakes on a small scale, it doesn’t have to be the end of the world.

5. Don’t stop at savings

Building short-term savings is very sensible, but it shouldn’t stop there. Junior ISAs (JISA) can be a great way to build a nest egg for your child to start adult life.

Each tax year they have an allowance, and anyone can save or invest into it – this years’ allowance is £9,000. The money in a JISA will grow tax free, and then at 18 it will belong entirely to the child.

Unfortunately, in the year to April 2021, well over half of money paid into JISAs was saved into cash. However, over the long term, of up to 18 years, you have more time to ride out the ups and downs of investing in the stock market. Having this much time on your side means a Stocks and Shares JISA could be a sensible option.

Not only will a JISA provide a nest egg to help them start adult life, it’s also a brilliant way to introduce younger people to investments. It’s far easier to encourage them to engage with the idea of investing when they already have a stake.

Growing up without any contact with the investment world can make it seem like an alien planet, so millions of people don’t engage with it at all. By giving your children a stake, and talking to them about it, they never have to think ‘am I the kind of person who invests?’ because they already do.

This article isn’t personal advice. If you’re not sure if an investment or course of action is right for you or your child, ask for financial advice. All investments can fall as well as rise in value, so you could get back less than you invest. Tax rules can change and their benefits depend on your circumstances.

Kids can now go free

The HL Junior ISA gives children a head start for their future.

  • Free to manage. We’ve removed our account charges, including online share dealing commission, so that more of what you pay in will benefit the child. Depending on where you invest, other charges could still apply.
  • £9,000 annual allowance. Any investment returns are free from UK income and capital gains tax.
  • The whole family can chip in. Once opened, anyone from grandparents to family friends can pay into the account.

When the child turns 18, they will be able to access their money. Accounts can only be opened by the parent or legal guardian of the child.

Find out more about the JISA

Investment ideas for children

Investing in funds and individual companies isn’t right for everyone. Shares are higher risk as if that company fails, you could lose the whole investment. If you cannot afford this, investing in a single company might not be right for you. You should make sure you understand the funds and companies you’re investing in and their specific risks. For funds, you should also make sure its objective is aligned with your own. Any investments should be held as part of a diversified portfolio.

A fund idea

Alex Watkins, Passive Investment Analyst

Fidelity Index World fund

For investors who don’t have the time or knowledge to research individual investments, we think a fund could be a great option. Funds can be a great way to diversify as they usually invest in a wide range of different investments.

One option could be a global tracker fund. These funds hold a diversified portfolio of shares that represent the index they’re tracking. They’ve become more popular in recent years due to their low fees, transparency and because they’re so easy to use.

The Fidelity Index World fund features on our Wealth Shortlist. It aims to replicate the MSCI World Index by buying the 1,500 constituent companies and in the same proportion. This offers diversified access to a range of companies, sectors and countries from around the world.

The biggest sectors in the portfolio are currently information technology, financials, and healthcare. The size of the US stock market dwarfs others around the world, so tends to form a large part of global portfolios. The Fidelity Index World fund is no different, with American companies accounting for around two-thirds of the fund. That means, performance is heavily tied to the US market.

A well-rounded portfolio diversifies across a range of different investments, sectors and parts of the world. Having a good mix of shares and bonds offers a strong foundation for investors to weather the ups and downs of the stock market.

For more information on this fund and its risks, including charges and the key investor information, see the links below.



3 share ideas

Sophie Lund-Yates, Lead Equity Analyst


We know what you might be thinking, but this is the rare occasion where we’d say gifting whisky to a baby is no bad thing. We always say it’s important to diversify, and stocks like Diageo offer geographical diversification in one company. The drinks company sells its famous products like Guinness, Smirnoff and Johnnie Walker, all over the world.

Strong brand power is what sets Diageo apart. While food-sellers are more likely to see margins come under pressure as customers trade down to own-brand options, that behaviour doesn’t impact our preferred booze in the same way. If we walked into a bar and non-branded vodka was on display, we’d probably steer clear.

These very strong brands feed into a more reliable dividend too. We think Diageo is a strong compounding option to help your child’s money grow over time, though as always there are no guarantees.

The biggest risk where Diageo is concerned is its valuation. The market has high hopes for the group with a price-to-earnings ratio of 20.7 – this adds pressure for Diageo to perform.




Not only is Disney a favourite with children, we think it has real long-term growth potential.

Disney+, the group’s streaming service, is nursing heavy losses at the moment. But Disney’s unrivalled back catalogue of content means scale and profits should continue to build. Things could be a bit bumpy for now, but we think this is an area of real growth potential overall.

And while that cooks up a storm in the background, the theme parks are a major source of income too. Now the world of travel is getting back to normal, these should continue to offer reliable revenue long into the future.

Disney’s brand and fan appeal are some of the strongest around. It’s a core business with a growth story tacked on. The shares change hands for a price-to-earnings ratio of 20.9, which is lower than it’s been, but still quite high. That means there could be ups and downs on this magic carpet ride.

Remember, before you can trade US shares, you need to complete and return a W-8BEN form.



Lloyds Banking Group

Lloyds Banking Group is a bellwether for the UK economy, so ups and downs are part and parcel. But over the longer term, its business model is attractive.

Lloyds is working to reduce its exposure to the interest rate cycle, over which it has no control. But for now, interest income will be where the group makes the majority of money. Interest rates of 2-3% are the sweet spot for banks, and it’s reasonable to predict a return to these levels in the medium term.

Lloyds boasts one of the highest returns on tangible equity percentages (a measure of profitability) among the major UK banks too.

Ultimately, retail banking is a bread-and-butter service where we expect demand to remain strong, and Lloyds’ balance sheet is in good health. This enables it to pay a dividend, which is an important element to consider when investing over the long term. Remember though, no dividend is ever guaranteed.

These strengths are on offer for an undemanding valuation. This also reflects some nerves from the market about the group’s short-term challenges.



Information correct as at 30 April 2023.

Unless otherwise stated, estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates aren’t a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.


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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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