Teaching Money Skills in KS1 and KS2: A PSHE Guide to Financial Education

Developing strong money management skills is essential for every child, and primary school is the ideal place to begin building this foundation. High-quality PSHE financial education introduces young learners to the concept of money, its value, and the decisions people make when earning, saving, and spending. Through well-structured PSHE money lessons, children gain confidence in handling real-life financial scenarios while supporting their personal development and independence.

In KS1 and KS2, teaching money skills becomes an increasingly important part of financial education for primary schools, equipping pupils with the knowledge they will need throughout life. Whether exploring simple exchanges or discussing budgeting and saving, primary school financial education plays a crucial role in shaping responsible, confident future adults who can manage money effectively.

What Is Financial Literacy for Primary Pupils?

Financial literacy for kids involves building a clear understanding of what money is, how it works, and why it matters. At its core, financial literacy helps children develop the ability to make informed decisions about earning, saving, spending, and managing money responsibly. These skills form a critical part of personal wellbeing and long-term independence.

Financial Literacy in KS1

In Key Stage 1, KS1 money skills focus on introducing children to the basics. They learn:

• What money is

• Why people use money

• How money is exchanged for goods and services

• Simple differences between needs and wants

Through role-play, stories, and classroom activities, KS1 pupils begin understanding money for kids in a simple and practical way. At this age, the emphasis is on curiosity and exploration—helping children recognise that money has value and is limited.

Financial Literacy in KS2

In Key Stage 2, KS2 money skills expand on earlier concepts by introducing more advanced ideas including:

• Budgeting and saving

• Planning for short-term and long-term goals

• Understanding how jobs generate income

• The role of banks, accounts, interest, and financial safety

• Making informed spending decisions

Pupils also begin connecting money to real-life responsibilities. They learn how people prioritise expenses, why financial planning matters, and how responsible choices can affect long-term wellbeing. This helps children build confidence and independence while preparing them for future challenges.

Why Should Schools Teach Financial Literacy?

Providing financial literacy for primary pupils is not only beneficial but essential. The modern world requires children to navigate increasingly complex financial systems, from online payments to digital banking. Teaching these skills early sets the foundation for resilient, capable adults.

Supporting Life Skills and Independence

Understanding how to manage money is one of the most practical life skills a child can develop. By teaching children about money within PSHE, schools give pupils the ability to make thoughtful, responsible financial decisions. Children who understand money are more likely to avoid common pitfalls later in life, such as overspending, taking on unnecessary debt, or misunderstanding financial products.

Furthermore, money management for children supports independence. As pupils begin receiving pocket money or managing small budgets during school projects, they learn to evaluate choices, set priorities, and consider the long-term consequences of their decisions. When these lessons are introduced consistently from KS1 to KS2, children gain a realistic view of how money works in everyday life.

Financial literacy also strengthens numeracy skills, reinforces positive habits, and helps children view money as a tool rather than a barrier—empowering them to build confidence and future security.

Key Topics in PSHE Money Management Lessons

Schools deliver financial education for primary schools through a variety of PSHE topics that help children build both knowledge and confidence.

Understanding the Uses of Money

One of the first steps in PSHE financial education is helping pupils understand why people need money. Children begin exploring the everyday uses of money—buying food, paying for transport, accessing healthcare, or purchasing essentials. These discussions show pupils that money is not unlimited and that families must make decisions about what they can afford.

Many young learners may only see small parts of financial decision-making at home, such as shopping or paying for hobbies. PSHE lessons expand this understanding by explaining how households prioritise needs, plan for emergencies, and consider the costs associated with daily living. Understanding this helps children see money as a practical resource that must be managed carefully.

Using games, discussions, and stories, teachers can help pupils connect these ideas to their own lives, encouraging responsible attitudes and building empathy for the challenges adults face when managing finances.

Budgeting and Money Management

Budgeting is one of the most important aspects of financial literacy. In KS2, pupils begin to explore how to divide money among different needs and activities. Using real-life examples, classroom projects, and interactive games, children learn to create simple budgets that include spending, saving, and planning for future goals.

These structured activities help pupils understand the value of careful planning and delayed gratification. For example, children may create weekly budgets using pretend incomes or make decisions about how to allocate classroom currency for activities. Such exercises develop reasoning skills, problem-solving abilities, and practical understanding of how money works in everyday life.

Budgeting also introduces children to the idea of setting priorities. Should they spend money now or save for something more meaningful later? These discussions build emotional intelligence and financial discipline, helping pupils become thoughtful, confident decision-makers.

Keeping Money Safe and Understanding Employment 

An essential topic in primary school financial education is learning how to protect money. Students explore:

• Banks and savings accounts

• Digital payments and staying safe online

• Why people keep money secure

• How financial institutions support saving and spending

Role-play activities—such as opening a pretend bank account—help students understand how banks support financial wellbeing.

In addition, children learn about the connection between employment and earnings. This introduces the idea that money is earned through work and that different careers provide different incomes and responsibilities. These lessons also support wider PSHE themes, including careers education, fairness, and valuing effort.

By linking financial literacy with real-world employment, pupils develop a strong sense of responsibility and long-term thinking, preparing them for future learning and decision-making.

Engaging PSHE Activities for Teaching Money Skills

Practical and Interactive Learning

PSHE gives teachers the flexibility to use creative, hands-on activities that make teaching money skills in KS1 and KS2 enjoyable and memorable. Games, simulations, and storytelling create opportunities for children to learn through experience rather than theory.

For example, teachers can:

• Run class shops where children exchange play money

• Use board games to demonstrate saving and spending

• Assign budgeting challenges for class projects

• Role-play real-life scenarios such as bank visits

• Encourage group decision-making about shared budgets

These activities help children apply financial concepts directly, reinforcing numeracy, communication, and problem-solving. They also strengthen collaboration, as pupils learn to negotiate, prioritise, and make decisions together.

Such experiences form a crucial part of PSHE important learning, helping children build emotional understanding alongside practical financial skills.