How to teach kids good financial habits

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Tips for your kids and money.

It can be tough knowing the right way to teach kids about money and how it works when finance and payments is such a rapidly changing area.

The increasingly digital nature of money means that it’s no longer appropriate just to give a child a piggy bank and pocket money as the main financial lesson of childhood.

A much better approach is to start teaching kids about how the financial system works from an early age. There are lots of fun ways to approach the topic and heaps of online tools parents can use to instil an appreciation of money in children from an early age.

Give pocket money digitally

We used to think about money as only being coins and paper, but now many transactions are performed online, which can make money seem unreal to kids.

So, from a very young age, teach children about the value of the different notes and coins so they appreciate the basics early on in life.

One way to help them understand about money is give kids their pocket money digitally. Open a bank about for them and organise a direct debit each week or month.

If they have been asked to do chores for their pocket money and they don’t do them, you can always cancel the next payment.

You can also give them the option of earning more for additional chores, funds for which you can also place in their bank account.

It’s a great way to teach children early about online banking and how digital transactions work.

Give kids some context around money

It can be really difficult to talk openly and honestly about money and it may not be appropriate to give children a full understanding of the family’s assets and liabilities at a young age.

But it’s still important to help children understand the value of money. Without giving away too much personal information, talk openly and honestly about how much different jobs pay, what it costs to buy a house or flat and how home loans work.

This can be overwhelming for little kids. Teach smaller children about how much everyday household items cost, the value of shopping around for a better price and, for the really little ones, how to recognise numbers.

Teach kids about share markets

Most Australians with superannuation funds are invested in the share market, and it’s important to help kids understand from a young age how their investments work.

The Australian Securities Exchange has a great online share game kids can use to learn about how investment markets work. It teaches them about how to buy and sell shares and that what goes up may come down.

“Giving kids a good grounding in sensible money management sets them up for life,” says MyState Bank Managing Director & CEO Melos Sulicich.

“It’s never too early to talk to kids about money, and many will start asking questions from a young age about different expenses. Encourage this interest and teach them about financial concepts at an appropriate age. That way you’ll give them a firm financial foundation from the outset, one of the best gifts a parent can give their kids,” he adds.

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