Teaching kids about money
Read time: 4 mins

Teaching kids about money

It’s never too early to teach your child the basics of financial literacy: earning, spending and saving.

In Australia, financial literacy is often not taught in schools. This means that many young people struggle when it comes to managing money

Good news: it's never too early to teach children the basics of earning, spending and saving.

Teaching your child about money and finances doesn't need to be complicated. Nor do you need to be a financial whiz to help your child develop a healthy relationship with money. Remember, habits created early in life carry through to adulthood.

We explore a few tips and resources that might help you and your child.

Talk to your child about money

Money is a big part of life: needing it, earning it, saving it, and unfortunately not always having enough of it. Very few people get to experience life without money worries, so the sooner we start learning how to manage it, the better.

It's a good idea to explain to children how, as adults, we get paid to work. Then, once we get that money, it's split up to pay for a number of things: rent or mortgage, food, clothing, treats, education. One of the first things we need to learn is that we can’t have everything we want because money is not endless.

Money doesn’t grow on trees

Who didn't hear this from their parents when growing up? Although these days it's more appropriate to say it doesn’t come from a plastic card! Because it's become so common to pay for things by waving a card or phone in front of a machine, it's no wonder children get confused about the value of money. Next time you’re out with you child and you pay this way, explain that when you ‘wave’ or ‘tap’ your card, it connects with your bank where your money sits in an account – the money that is paid to you for the work you do. Every time you use your card to pay for food, clothing, treats etc., money is taken out of the account. Spend too much and you may be left with nothing!

Pocket money = payment for chores

The best way to teach the value of money is to earn it! Pocket money is one of the ways, before kids can get real jobs, to earn money for doing something. It’s never too early to use pocket money to help children to understand the value of money. You can choose to pay them for certain tasks, for example:

  • picking up toys or tiding up their room
  • mowing or racking the lawn
  • vacuuming the house
  • cleaning bathrooms
  • washing the car
  • taking the rubbish out
  • cooking dinner or making school lunches
  • hanging out and bringing in the washing
  • packing and unpacking the dishwasher
  • walking the dog 

Rest assured parents, there’s no harm in not paying them if they don’t do the job properly, or not at all! By setting a standard early, they learn that they'll only get paid when their work is done properly.

Get a job!

Getting a job at a young age has several benefits. The biggest – and most obvious – motivator is money. It doesn’t matter if it’s to buy the newest and greatest sneakers or to help a family with bills. What does matter is that it teaches a child the value of money: when to spend it, when NOT spend it, and how to make it last. There’s no better lesson than spending your first paycheck in one go and then realising there’s nothing left until the next week or month! If your teenager is interested in getting a job, find out how working can boost confidence and skills.  

In Australia, each state has a different entry age for when kids can start work. But it’s safe to say that kids can get a job when they’re 15. Once they start earning, they can set goals and start saving.  Find out a bit more on the ins and outs of starting work as a kid in your state.

Saving for your future

If your child is young, a piggy bank is a fantastic way to get them to start saving as they can see their money grow! You can even get digital money boxes where the value is calculated as the coins are inserted! 

As kids get older, they can open a youth bank account which has no fees or charges. This helps keep their money safe and prevents it being spent on ‘impulse’ buys (lollies, toys, and other things that won't last long!). Most banks and credit unions offer bank and savings accounts for children — and many pay interest on deposits.

It's also important to explain why it's good to save and give them short-term and long-term goal examples. To help them understand, explain how and what you save for.

And not to put pressure on parents, but for bigger purchases like first cars, consider a joint saving scheme where parents match kids’ savings e.g., for every dollar they save, you add a dollar or .50 cents to the ‘pot’. It provides them with an added incentive to save more!

What schools don't teach kids, but they need to know

Super - employers must pay 10% super into a super account if:

  • you’re 18 or over, and paid $450 or more (before tax) in a calendar month (although this will change in July 2022 where super will have to be paid no matter how much money is earned in a month), or 
  • under 18, paid $450 or more (before tax) in a calendar month, and work more than 30 hours in a week.

The earlier someone starts contributing into super, the more it will be worth in years to come when they retire. Find out more about the benefits of superannuation

Budgeting - it’s a good idea to teach kids how to use a budget to balance what they earn and spend. 

Credit cards - once your child turns 18, they can apply for a credit card. This is when everything they’ve learned about money management comes into play. Credit cards can lead to debt, but they can also create a good credit history (if used properly) and can promote healthy spending habits. Before applying for one, teenagers should learn about the dangers of credit cards and how to use them wisely. Teach them to pay off the balance and avoid buying things they can’t pay off each month. Read more.

Buy Now Pay Later

What could be more convenient than buying something now, and paying for it later, right? Buy Now, Pay Later has become a popular way for the younger generation to buy things today - it’s offered nearly everywhere now. It's like paying for something on a credit card in that you don’t have to have the money now and you can pay for it over time. However, unlike a credit card, you pay fees not interest. Something to think about is if you have several items on the go and you miss payment. If this happens, you’ll rack up a lot of debt which leads to a number of other problems - including bad credit history! As with all things, if it's not managed well, it can lead to more problems than good!  Find out more

Help your children to help themselves

Want to find out a bit more on how to prepare your children for their financial future? For information on everything from financial planning and budgeting to education and creating good financial habits, head to Moneysmart.

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