When and how to start with a child's finances? Three steps for a conscious beginning

Every parent wants their child to be independent in the future. However, managing finances does not have to wait until adulthood. On the contrary, the best time to shape good habits is specifically when young.

In fact, an account can be opened for a child immediately after their birth. This way, one can start building their future before they even begin managing money themselves. ‘The question is not how much money a young person has, but what habits they form for themselves. If they learn to save and invest early, time works in their favour,’ says Romi Ly Soo, the Head of LHV Youth Bank.

Why start early?

Financial literacy does not appear overnight. It develops consistently through small decisions and daily habits. If a child learns early on that money is not only for spending but also for saving and growing, it will be much easier for them to make conscious financial decisions as an adult.

Starting early also provides an opportunity to involve family members. For example, birthday and pocket money can be transferred directly to the child’s account and directed straight into savings or investments. In this way, the child gradually develops a strong understanding that money does not just appear, but has a specific purpose.

The size of the amount one starts with is not important. Much more important is consistency and the knowledge of how money moves and grows.

Three practical steps

1. Give the child real experience in handling money

One of the best ways to learn is real life. If a child has their own bank card, they develop a clearer overview of spending and the value of money.

For example, the LHV Youth Card is not just a means of payment, but also a tool that helps shape financial literacy. The card is free and offers discounts at LHV partners whose products and services young people frequently use. This helps them better understand the value of money and the impact of choices.

• In the Bolt app, one ride per month is one euro cheaper.
• In the Bolt Food app, one order per month is 25% cheaper.
• MyFitness training packages can be joined for free, and the MyFitness+ Full Package is just 54 euros.
• At R-Kiosk, all hot food and drinks are 20% cheaper.
• In the Sportland online store, a selection of products is 20% cheaper.
• At VLND Burger, all purchases are 15% cheaper.

Additionally, a young person participates in a monthly draw if they make at least 15 payments with the card. This creates a pleasant connection between the conscious use of money and small wins.

All benefits can be explored further on the LHV website.

Security is also important for the parent: they can set card limits and keep an eye on spending in the mobile app. This way, the child makes their first independent transactions while the parent guides and intervenes, if necessary.

2. Teach how to save using simple solutions

Saving money does not have to be complicated or require large sums. The solutions that work best are those that become a daily habit.

A Savings Account is like a digital piggy bank. Money can be set aside there for a specific goal, be it a new phone, a trip or simply a peace-of-mind fund.

Saving can be made even simpler with the micro-saving service, which rounds up every card payment amount and automatically transfers the difference to the Savings Account. For example, if the purchase amount was 7.1 euros, then 90 cents moves unnoticed to the child’s Savings Account.

This is also a good opportunity to talk to the child about finances: together you can discuss what it is worth saving money for, make a simple budget together, and learn to distinguish between wants and needs.

‘Young people aged 18–25 save an average of 51 euros per month through micro-saving. This shows well that even small amounts can lead to significant results,’ explains Romi Ly Soo.

3. Show how money can grow

Alongside saving, it is important to teach the principles of investing. The earlier a young person understands how money grows over time, the greater the impact.

LHV’s Growth Account allows one to start with even one euro and automatically invest in chosen funds or shares. If you add micro-investment to this, the rounded part of each card payment is automatically channelled into investments. For those under 26, the Growth Account has no purchase or management fees.

On average, our clients accumulate about 400 euros a year in a Growth Account. Over a long period, this can turn into a significant sum – for example, approximately 40,000 euros in 25 years, assuming average returns.

At the same time, the young person learns that money does not have to just sit in an account. They see how small amounts grow over time and, thanks to that, better understand why consistency is more important than individual big decisions.

How to motivate the child?

It is necessary for the child to see the result of their actions. Therefore, it is worth doing the following with them:

• set clear financial goals;
• track progress;
• celebrate small wins.

One should move toward money not being an abstract concept for the child, but something that has a clear meaning and purpose. Even small mistakes, such as impulsive purchases, are part of the learning process that can be analysed together with the child.

The parent’s role is the most important

A child learns financial literacy not only through words, but primarily through example. If a parent talks about money openly, makes conscious choices, and involves the child in discussions on the topic, the child will also develop a realistic understanding of handling money.

Rights and responsibilities can be given to the child gradually. One can start simply by monitoring the account balance and then begin making small payments. This creates a safe environment where the child can learn and experiment.

Financial confidence does not develop overnight. It is born from small decisions repeated every day: first payments, cents set aside, and first investments. This skill cannot simply be handed over to a child; it must be taught consciously.

The earlier one starts, the easier it is to shape habits that support the child as an adult.

And the first step may be simpler than thought.