5-step guide to teaching kids about money

By Helen Baker

March 24 2021
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It’s never too early to start teaching kids about money and how to manage it. With the added challenges associated with COVID, it’s never been more important either!

Even as coronavirus case numbers dwindle in Australia, the financial effects of the pandemic will be felt for a long time to come. It has also been the ultimate lesson in the importance of saving for a rainy day, as things can happen that you never saw coming.

As we settle back into the school year, it’s a perfect time to be teaching your kids about money. These five steps will help get you started:

Stamp out the ‘money tree’ misconception

We all heard it growing up and now we’re passing it onto the next generation: “Money doesn’t grow on trees”. However, if you keep handing out the cash, those words sound pretty hollow.

When it comes to teaching kids about the value of money, there’s really no better way than to start them spending their own cash instead of yours.

Giving them pocket money or an allowance provides a hands-on approach to saving for big things, budgeting to meet regular costs (like going out with their friends) and, crucially, that once it’s gone, it’s gone!

As they get older, tie pocket money to household chores to introduce the concept of earning an income, and the value of hard work.

You may even want to revisit your own relationship with money, too. Taking control to build solid financial foundations will benefit you longer term and simultaneously sets a positive example for your kids to follow.

Make play time count

We know that puzzles and Lego are not just fun to play with but also teach kids valuable skills such as problem-solving. The same is true of many board games when it comes to money.

Games like Monopoly and Game of Life allow kids to experience different risk styles and what it’s like working with cash – including how your choices influence your bank balance.

They’re also free entertainment, meaning you can save cash for Christmas festivities.

So, why not skip movie night and get the dice rolling instead!

Encourage entrepreneurship

The school holidays and continued social distancing requirements mean many kids will have plenty of time on their hands.

They could use this time to start their own little business – washing cars, weeding gardens and walking pets within the neighbourhood. If you live near the shops, they could do grocery shopping for elderly neighbours who can’t get out or are afraid to because of COVID.

Or perhaps they could monetise their talent and sell things like homemade artwork, jewellery, music or crafts online.

That way, you’re teaching them not only about money but skills in business, too.

Waste not, want not

On average, every single Australian throws out 300kg of food waste each year – equivalent to one in every five bags of groceries we buy. Imagine giving them $50 and then making them throw $10 in the bin!

I suggest involving them in the grocery shopping. Show them the price of everything that goes into the trolley. Then you can help them attach a dollar figure to their wastage.

That way, they learn to think twice about throwing away good food or opening things only to leave them half-eaten.

The gift of giving

Tough times help us see there is always someone worse off, and the pandemic has hit many people hard – whether from jobs lost, isolation or, sadly, the death of a loved one for over 900 Aussie families.

From donating toys or clothes to the less fortunate, volunteering time at a charity or selling things online to raise money, there are many ways kids can give to others in need.

After all, Christmas is the season of giving – and what better way to teach kids the value of money than encouraging them to support those who need it most!

Helen Baker is a licensed Australian financial adviser and author of two books.

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