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Financial Capability - 4 to 11 year olds

What is 'Financial Capability'?

The DfE defines financial capability as "the ability to manage one's finances and to become a confident, questioning and informed consumer of financial services." (then the Department for Children, Schools and Families, Nov 2008).

Nationwide also believes that it is particularly important for young people to develop a good understanding of how to manage their money, and eventually their debt, effectively and responsibly.

In 2000, the DfE (then the Department for Education and Employment) published guidelines for the teaching of financial capability at key stages 1 and 2. This organised financial capability into three inter-related principles:

  • Financial knowledge and understanding - helping children understand the concept of money and how it is used.
  • Financial skills and competence - helping children to manage money, including planning for the future.
  • Financial responsibility - helping children to understand the wider impact of money and how their financial decisions influence their future as well as that of their family and community.

'Financial Capability' objectives

Financial Understanding
  4 to 7 years 7 to 11 years
What money is and the exchange of money
  • Recognise the coins and notes that we use.
  • Understand that different countries use different coins and notes.
  • Understand the exchange of coins and notes for goods.
  • Know about other forms of money: cheque books, credit and debit cards and how the payments are made in these cases.
  • Understand that cash isn't the only way to pay for goods and services.
  • Begin to understand the concept of credit.
Where money comes from
  • Recognise that there are regular and unpredictable sources of money.
  • Understand how we get money from work-earnings.
  • Know that we may get money when there is no work or insufficient work from benefit payments and understanding how this is paid for.
  • Understand that we need money in retirement and how this is paid for.
Where money goes
  • Be able to talk about things that they may want to spend their money on.
  • Recognise that adults also have to spend money on familiar things like household expenses.
  • Recognise household expenses and regular financial commitments.
  • Begin to understand why money, such as tax or pension contributions, is deducted from earnings.
Financial Competence
  4 to 7 years 7 to 11 years
Looking after money
  • Know how we can keep money safe - either by giving it to a responsible adult or by locking it away.
  • Begin to understand the importance of keeping financial records.
  • Understand that we can keep money safe by putting it into an account.
  • Understand the importance of keeping financial records.
  • Know about some official financial records, such as bank statements or building society books.
Spending money and budgeting
  • Know that we have to pay for what we buy.
  • Be able to consider possible ways of spending money.
  • Understand that we need to save if there isn't enough money for everything we want, or need, to buy.
  • Understand that there is a range of ways to save money.
  • Begin to be able to plan and think ahead.
The wider implications of finance
  • Understand the consequences of losing money or having it stolen.
  • Begin to understand the likelihood of events such as floods or accidental damage to household goods, and to consider the need for insurance.
  • Understand that we may get money from money by interest from savings.
Financial Responsibility
  4 to 7 years 7 to 11 years
Making personal life choices
  • Choose how to spend money.
  • Begin to talk about the value of money.
  • Begin to be able to talk about how spending money and our satisfaction from purchase may vary.
  • Decide how to spend money.
  • Balance needs and wants, and prioritise what gets first call on a limited supply of money.
  • Understand the difference between good debt (planned and manageable) and bad debt (unplanned or unmanageable).
  • Be able to assess best buys in a variety of circumstances.
  • Be able to talk about how spending money and our satisfaction from the purchase can vary, looking at how long things last, how well they perform and how long we are still interested in them.
Implications of finance
  • Begin to understand that there are consequences to having more or less money.
  • Begin to understand that people have different standards of living in different countries.
  • Understand that standards of living vary across time and place.
  • Understand that there is an ethical dimension to financial decisions.

DfE (formerly DfEE - Financial Capability through Personal Financial Education: Guidance for Schools at Key Stages 1 & 2. (2000)

Programme content

 For 4 to 7 year olds 

 For 7 to 11 year olds