How to teach your kids about money

The beginning of July is not just a change over of financial years for us… it is also birthday week in our household with our two eldest children celebrating their birthdays a week apart.

And boy, do children grow fast!! This year, my daughter turned 20 {OMG am I THAT old!!!} and my eldest son turned 16!

As I stop and think about how grown up my children are now, I also wonder if we have done / am doing enough to teach our kids about money and investing. They don’t share an interest in property quite the same way I do…yet, but when it comes to money they are very interested and I am confident that they are responsible with money. They’ve been taught from a young age.

These are the following things we have done to teach our kids about money:

1. Pocket Money – From a young age, our kids have received pocket money in exchange for chores around the house. The chores are always age appropriate and range from cleaning, hanging out washing, opening blinds, feeding the dog, taking out the trash.

The amount of pocket money depends on their age (their age minus 2, so at the moment our 9 year old gets $7 base pay), and they lose or gain more money if they don’t do their base chores or do more than expected of them. The amount of work they take on increases significantly if they have a specific item that they are saving for. They learn how to set a goal and work out how to achieve it.

2. Money games – We are big board game players, and we often have marathon sessions of monopoly and Robert Kiosaki’s Cashflow game. My kids love not only working out their game strategies but they also love gloating when they beat me! Through these games they are learning the power of owning assets and leveraging their money.

3. Financial Goals / Savings plan – If our kids want something expensive then they need to save for it. It doesn’t take them long to work out how long it would take them to save and what amount they need to be saving regularly in order to achieve their goal. Often they will get it earlier by working more shifts/doing more chores or finding other ways to bring in extra cash.

Our daughter has bought her own musical instruments (and french horns are definitely NOT cheap) and her own car by good old fashion saving and managed to boost her savings by taking on extra services such as babysitting and tutoring to fill her money box faster.

I know when she is ready to invest in property (which hopefully will be sooner rather than later), she will be able to save a deposit in no time.

4. Money mindset – We have tried to instil a positive mindset around money in all our kids. Very rarely do we tell them that they cannot have or do something because we don’t have the money or it’s not worth the money, but we do ask them to state their case as to why they want something before we outlay the money (and their argument needs to be good).

We also make sure they’ve done their research on products they want to buy and are not wasting their money on useless and low quality products. Our two eldest kids work part time jobs while still at school and uni, so they know the value of working for their money and they know where the best value is to spend their money…If you need to find cheap movie tickets or the best value for a night out with friends, then my kids have you covered.

5. Power of team work – Our kids are actually very money savvy between themselves. They will often pool their money to buy one product that they can use together or buy joint gifts for friends and family. They see the value in sharing and partnering up financially…this works much better as they get older. It’s probably not the best idea if there is a high degree of sibling rivalry.

Of course, there are heaps of other ways to teach your kids about money and developing good money habits…MoneySmart has some great resources to get you started, But I think the absolute best way to teach your kids about money and investing is to lead by example. Set yourself good money habits and a positive money mindset. If parents have good money habits then these habits are often be passed on to kids.

We have some great resources that you can download to help work out your money situation and set financial goals over on our free resources page. Check them out!