Parents & Carers

Make ‘money talk’ child’s play

6 tips for starting to talk to kids about money

Parents and carers naturally want to send their kids into the world with the skills and know-how to succeed. So we talk to them about the birds and the bees, teach them to navigate the world safely and even drive. But oddly, many of us never talk to them about money and how to manage it.

Here’s a few simple tips for passing on good money habits.

1. Start early

If you’re wondering when to start a child’s financial education, here’s the answer: today!

Every lesson in financial responsibility, no matter how small, can help shape a child’s view of money, its value and how it should be used. They’ll pick up on ideas like not spending more than you have by listening to you and watching how you act.

Once those basics are in place, you can take them to the next level with practical applications – like earning money by completing chores and using it to save for something they want. Good habits picked up early in life will stay with them and help determine their future relationship with money.

But first we need to…

2. Explain where money comes from

Money appears by magic for kids and so it’s important they become aware that it doesn’t grow on trees and you can’t always pay for what they want.

Take the time to explain how money is earned – like by going to work, from government payments or investment returns – and that it first has to pay for essential needs like food, housing and utility bills.

Needs versus wants

While we’re on the subject, it’s worth discussing the difference between needs and wants. It could also help to explain how you choose what’s most important to spend your money on. This could help encourage your kids to do the same before spending their pocket money.

3. Getting a feel for money

Knowing what money looks and feels like is the foundation for good money management skills because it helps kids understand it’s a real thing with real value.

Because they can touch and hold it, it’s smart to start your child with physical money first. It’s also an opportunity to explain that the size of coins isn’t always a good indication of value.

For instance, Australia’s 50¢ coin is often mistaken for a higher value because it’s the biggest while our $2 coin is one of the smallest.

Once your kids can identify values, you could then introduce them to digital money.

4. Start them off at home

There are a number of ways you can help kids get used to handling money and budgets. And it’s important to remember that any practice is good practice.

Lunch money might be a good place to start. If you usually give them a daily allowance, try changing to weekly or monthly.

Then keep checking in to see how they’re doing and if they’re managing to stay on track.

5. Let them see you doing it

Setting a good example is a sure-fire way to pass on good financial behaviour.

So while you’ve got the kids at the shops, show them what you’re doing and why. Explain why you’re buying extra sale items to save in the long run or how coupons can help reduce prices.

Once you explain your behaviour and they understand it, it’ll be reinforced every time they see you do it.

6. Let them learn by doing it themselves

One of the best ways to teach older kids is to set practical financial tasks for them to complete.

For example, you could put them in charge of the family’s meals for the week and give them a budget to shop with. Show them how they can save on some items (by buying own-brand or sale items) so they can spend more on others.

They’ll get it wrong at least once but that’s ok! It’s as much of a learning experience as getting it right. Just show them where they went wrong and let them try again.

A short word about debt

Debt’s not something most kids will need to worry about at their age but it won’t hurt if you give them some basic awareness.

Put simply, debt is money you borrowed and promise to pay back, that can include money you ‘lend’ them.

Explaining to your child that they’re obliged to pay back money they borrow from a sibling or friend to buy something now could help avoid a lot of heartache later.

4 more fun activities

Money might be a serious subject but learning about it can still be fun. Check out these ideas that harness the power of play for teaching kids more about money.

• Cash count. Ask your kids to place real money in order of value and count it.
• Play shops. Let the kids set prices and ‘buy’ and ‘sell’ items in make believe shops.
• Price check. Get the kids to create a real shopping list then check the prices in store.
• Game on. Play games like Monopoly and Pay Day for family fun and little-one learning.