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How to teach your kids good money habits

Financial Wellbeing Coach

2023-01-13 00:00

Estimated reading time
5 min

In this article

  • Teach kids about money in the digital age
  • Create learning opportunities
  • Set up their savings

In today's day and age, kids are used to seeing things paid for with the tap of a card or a quick click online. They rarely see physical cash change hands for everyday purchases, so it's no surprise the actual concept of money is getting harder to grasp.

So how do you teach them about money in the digital age? 

Take them shopping

Shopping is one of the best (and easiest) ways to teach kids about how to budget and spend accordingly. Prepare a shopping list, set a budget, then take your kids shopping with a clear goal – to get everything on the list without breaking the budget. Bring along a big calculator if you think it will help them to crunch the numbers. You could add some fun into it by asking questions like "Guess the price of this?", "Which do you think is a better deal?" and "Have we compared the prices between these items?" as you move through the aisles. Let your kids pay with cash and count the change. Don't forget to reward yourselves a little if you meet the goal – preferably, with the spare change.

Give them pocket money

Pocket money (aka an allowance) can be another great way to show your kids how to manage money. For example, you might give money weekly to the youngest ones, fortnightly to tweens and monthly to teens to teach them how to make their money last. You may want to change the amount or method of payment as your child or children get better at making their money last. Having control over their finances from an early age will boost their confidence to do the same as adults.

Offer extra incentives 

Kids love a challenge – even in the form of daily chores like cleaning their room or helping with the dishes (which are great for teaching them responsibility, too). To teach them the reward for hard work, you could offer them the chance to earn some extra money (on top of their allowance) by helping you with bigger jobs, such as organising the pantry, washing the car, or mowing the lawn. Getting paid for extra work will help instil good habits and give your kids more control over their saving and spending. Nothing beats real-life lessons. 

Create learning opportunities

If your kids spend their entire allowance in a heartbeat, consider saying no to their requests for more money or offer suggestions as to how they can make up for it before their next allowance is due. Be firm in your decision and stick to it. Negative consequences can carry powerful lessons, even if they're harder to get through. The sooner they learn this, the sooner they can move on to the next lesson. Have conversations with them about how to do better the next time around – hopefully, they will start making wiser choices. This will also teach them about actions and consequences, and responsibility.

Let them use their talents 

Is your child a born performer? Or an entrepreneur in the making? Maybe they just really love making fresh lemonade? Whatever their speciality, why not let them use it to their advantage? See if they can sign up as a local busker (check with your local council for specific requirements and regulations) or start their own home business selling a product or produce. This not only lets them enjoy their work but learn valuable life lessons about being their own boss and getting client (or crowd) feedback.

Set up their savings

As a parent, one of the most important things you could do for your kids in terms of money is to help set up their accounts. Not only does this teach them good saving habits from an early age, but it kickstarts their savings account too (and can earn them some good compound interest over multiple years).

Make sure to teach all kids to save for a goal, no matter how big or small. You could incentivise them by matching their savings to explain what it can lead to, and why it's important.

If your kids are younger, you could teach them the Save, Spend, Give/Share model. This involves having three clearly labelled, see-through jars. The labels serve as a reminder of what they're saving for. Transparent containers allow them to see their cash and their progress to feel more motivated. With older kids, this can be done with having different bank accounts which they can also label for bigger goals, such as Everyday savings, New phone, First car, Gap year, etc.

Walk the talk

You've heard it before, but leading by example is one of the most positive ways to teach your children about anything, including money. You can't expect them to learn to save if you're constantly spending money. So, make sure you're setting a good example for the little people who are looking up to you. Equip yourself with knowledge and stay abreast of any news or developments that might affect your spending. Model budgeting and smart money habits. Be open about your financial and retirement goals and let them learn by seeing how you handle money. Most importantly, keep evolving.

There are also plenty of books, podcasts, workshops and free educational resources online for all ages and levels to choose from. Look to family and friends who are good at managing their money - get their advice, study their successes, and learn from their failures.

Weaving these practices into your daily routine will help your kids form good money habits. And remember, the younger you start them on their journey, the more effortless it will seem for them as they grow up.

How to teach your kids good money habits
Financial Wellbeing Coach

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The information set out above is general in nature and has been prepared without taking into account your objectives, financial situation or needs. Before acting on the information, you should consider whether the information is appropriate for you having regard to your objectives, financial situation and needs. By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.