How to Talk to Children About Money – It’s a Piece of Cake

By jmeeuwis 22nd September 2021

Approaching the discussion of money with your child can be made easier by adopting the cake analogy, there are five main points to consider:



Before you eat a cake, you have to make it! It’s the same with money: if your child wants to buy something, they need to earn money to pay for it. Sometimes, if they’re lucky, they might be given money as a present or as pocket money. But normally they’ll have to do jobs for it first.


When children bake a cake, it’s very tempting for them to dig in straight away! But sometimes they may have to save it for later – perhaps for a Birthday party or another special event.  In the same way, it’s great to put some money aside too. Whether it’s to save for something big, or just as a precaution.


Baking an apple pie? Plant the seeds and a whole tree might grow! This can be a useful image to help explain investing to young people. One of the ways to make money grow is to buy a small share of a business, if the business grows, shares can be sold to make more money. It’s risky: sometimes the tree – or business – fails, and you get nothing for your investment.


Most kids would love to eat cake all the time (and adults too) – but that’s not a balanced diet. Children need fruit and vegetables to stay healthy and money’s the same: sometimes we get to buy exciting things for ourselves, and sometimes we have to spend it on bills and groceries. That’s why making a budget is important, so we can balance our spending between the things we need, and the things we want.


Sometimes it’s nice to give a slice of our cake to someone else, so no one goes hungry. If your child feels that they have enough, they may want to give money away too.  It may be that they choose a charity they are passionate about and donate some of their pocket money each month, or maybe their friend is raising money with a bake sale.  Sharing makes a big difference to others and will help them learn the importance of helping people who are less fortunate.


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