Five tips for raising money confident kids

November 2017


Children often learn their attitudes towards money from home. So one of the most valuable lessons you can pass on is a healthy approach to managing money.

Showing kids the basics—like how to budget and shop around for the best price—can help establish good money habits for life.

1.     Make them feel like the money they spend is theirs

One way to do this is through pocket money, explaining what it is and isn’t for. Consider splitting it into portions for spending and saving—whether using a moneybox or something similar. Encourage kids to pick a savings goal and help them work out how much they’ll need to save to reach their goal by a specific date. There are some great kid-friendly resources available online.

Equally, if your finances or values mean you’d rather not give pocket money, explaining these reasons could also be an important lesson.

2.     Take advantage of ‘teachable money moments’

Children learn a lot by watching how you deal with money. Spending, saving, withdrawing, or donating money are all chances to teach children valuable lessons.

Convert the cost of bills into work hours, so kids understand the need to work hard to pay for utilities and luxuries they may take for granted—like electricity, heating, internet etc. It can also more concretely reveal the decisions and choices parents regularly have to make.

3.     Bring ‘invisible purchases’ to light

Generally, kids are visual learners. But nowadays, they see very few interactions with paper money. Explain that your employer deposits your pay into the bank’s ATM so your kids understand that an ATM isn’t an endless source of free money.

Take cash to the supermarket, allowing kids to compare the cost of items against each other and against a budget. Let them pay and check change at the checkout.

4.     Highlight the value of compound interest

If you start early, a little money now can grow into a lot of money later. Compounding is the ‘snowball’ effect of interest earned on interest in a bank account—or investment returns in the case of super.

It happens when you reinvest interest or investment returns rather than withdrawing and spending them. This can result in your savings growing faster.

 It’s an important way to demonstrate the trade-off between spending impulsively now and saving for a specific goal.

 The compound interest calculator on the Government’s MoneySmart website demonstrates how compounding can increase your savings.

5.     Manage expectations

Let teenagers know what you will, and won’t, pay for as they approach adulthood:

  • Who’ll pay their mobile phone bills?
  • Will they be expected to contribute to household expenses?
  • What support you can offer if they go on to tertiary education?

This can give them a realistic sense of what’s coming and encourage them to take on part-time work or more household chores to help them become more independent.

Check out our Money Confident KidsTM program for more tips

Presented by T. Rowe Price, this online program arms parents with tips and teaching tools to start the conversation about money with kids of varying ages. Free interactive games also help bring basic money concepts to life for kids.

You’ll find the program in the ‘Resources’ section of MemberOnline.

Written by Charles Azzopardi, Private Client Adviser, UniSuper Advice