Skip to Content

How to talk to kids about money

How to talk to kids about money

Brought to you by the Financial Planning Association of Australia

It’s not easy to talk to kids about money, especially when you don’t feel money savvy yourself. Do you remember the first conversation you ever had about money? I can’t recall how old I was exactly, but I definitely remember my parents sitting me down for a demonstration featuring miniature towers of coins and some apples and oranges from a nearby basket. The more fruit I gained, the fewer shiny coins I had in my possession.

Whatever your experience, there’s every chance that as a kid you developed a better understanding of how money works than kids do today. They’ve been coined the “Invisible-Money Generation” in a report released by the Financial Planning Association rel=”nofollow” (FPA) of Australia.

Share the dream

The Share the Dream report talks about how technologies like online transactions and ‘tap and go’, are creating new challenges when it comes to teaching kids the value of money. It’s not hard to see why. It’s so much easier to attribute value to a stack of gold coins on the kitchen table than a few digits in a banking app, which (at least to my kids) looks more like a pretty calculator.

The truth is the way we talk to kids about money better prepares them for the future. Despite this, 66 percent of parents say they are reluctant to broach the subject with their kids. 

As a financial planner and parent, I make a point to have open conversations about money with my daughters intertwined with everyday life. ‘How do we earn it’, ‘how do we maximise what we earn’, ‘how to save for the big things’.

The more they know, the more they will be empowered.

Some tips on how to teach children the value of money

I remember when my girls were around the age of 10, they would ask for a new pair of designer shoes. At that time, they got a weekly allowance of $20 each. The cost of the shoes was $80. Rather than just buy the $80 pair of shoes, or whatever else they had their eye on, I would ask these questions:

1. Do you need this right now?

2. Are you prepared to save your $20 weekly allowance towards the purchase of this, and can you wait 4 weeks?

3. If not, what extra jobs are you prepared to do now to get closer to owning this thing you’ve got your heart set on?

And then I say: ““To have everything you desire in life is achievable, and it all comes down to the decisions you make. How much effort will you invest into achieving the things you want? You are your most valuable asset.”

“To have everything you desire in life is achievable, and it all comes down to the decisions you make.”

Modelling the right kind of behaviour

Having money conversations with your kids can make a positive difference to their financial future. The first step in putting kids on the path to financial literacy is to reflect on our own attitudes toward money.

For example, did gender play a role in how money was managed or spoken about at home? Was money a taboo topic? Perhaps you recall your childhood money conversations as practical and cheerful?

The last thing we want as parents is for our worries to weigh on our kids.

Creating positive money memories for children starts with modelling good behaviour.

Planning for the future can alleviate anxiety. If you find planning tricky, start small and ask for help. Knowledge is power. Surround yourself with professionals in the know.

The Share the Dream report also revealed that “parents who seek or have sought advice from a financial planner in the past were more likely to have regular chats with their kids about money than those who do not (61% compared to 43%).”

How to talk to kids about money - advice from a financial planner and mum

Empowering kids towards financial success

Building a positive attitude around work will also help empower kids to have more agency in their own spending.

Start with some pocket money for completing age appropriate household tasks. It’s also a good idea to encourage your kids to look for casual work when they’re old enough.

The Share the Dream report found children with a paid job are more digital money savvy.

Eighty-four percent make online purchases for themselves or their family, versus 56 percent of those without a job. Who knows, they might even be able to teach us a thing or two.

How to Talk Money with Children

For practical tips and expert insights on how to talk to kids about money, click here to download a free copy of How to Talk Money with Children eBook.

Do you find it easy to talk to kids about money?

Image by rawpixel 

Why pocket money is good for kids - Mumlyfe

Tuesday 28th of August 2018

[…] […]

Amy @ HandbagMafia

Monday 27th of August 2018

I try really hard to have a realistic and frank outlook on money with my kids. I think it's important for them to understand it's a finite resource!

Suzy

Monday 27th of August 2018

We try and talk to our kids about what things cost as much as possible so they become aware that everything costs. We are slowly introducing chores and showing them how long it takes to save for things. Definitely a good idea about getting a job, I think that makes a big difference.

Mumlyfe

Monday 27th of August 2018

Love how you are showing your kids how long it takes to save for things. That seems to be a forgotten art and so necessary for good money habits.

Bryony

Sunday 26th of August 2018

We try and teach our 4 year old about money but you're right - it's hard when everything is on credit card. I've been wondering lately what age is appropriate to start giving pocket money - can they be too young?

Mumlyfe

Monday 27th of August 2018

I'm not sure what Fran would recommend, but I don't think there is a "too young". If you think your 4-year-old is ready for a little bit of money management, it might be fun! I used to play shops with Lottie after she "earned" money helping me in the kitchen. So, pretend money worked for her at that age, but who's to say real money isn't a good idea too!

Toushka

Friday 24th of August 2018

Money is definitely a daily conversation here with my kids. I only use cash when the school asks for random amonunts though. I may need to rethink this. But I do love the app we use to sort pocket money. My kids have become pretty savvy savers and hopefully they will be saved from the mistakes I made in my youth because I had no idea

Mumlyfe

Monday 27th of August 2018

Are you using Spriggy, Toushka? It's an app that was recommended in the Mumlyfe group and I'm keen to try it with my kids. I wonder if just getting them debit cards wouldn't amount to the same thing though...