Parenting is not an easy gig. There is much that we need to teach our children to prepare them for adulthood.

Alongside toilet training, table manners and making the bed, managing money is an important skill to learn. As parents, we have a responsibility to teach financial literacy to our children from an early age.

Their little brains are like sponges. They are eager to learn, watch closely and try to imitate us. It is better to start positive money habits young than try to correct them later.  

We can say all the right things and teach them skills but if we are not modelling this in our behaviour, chances are they are not going to take much notice.  Monkey see, monkey do.

“Children have never been very good at listening to their elders, but they have never failed to imitate them.” James Baldwin

Here are some practical tips for introducing basic money concepts at different developmental stages.

Preschool

The conversations we have and behaviours we model in the early years build a foundation for future stages. Here are some suggestions:

• Boundaries are important. You are allowed to say no to your children, even if it means a tantrum at the checkout
• In saying that, avoid taking them to shopping centres where you can. It can be too hard to resist, especially at this age
• Young children can do basic chores for spending money, in addition to basic jobs expected as part of the family
• If children ask for a toy, take a photo of it or add it to their wish list for a birthday or Christmas
• Sign up for your local toy library
• Allow them to spend some of their money at op shops and garage sales
• Let them pay in cash or use your debit card at the checkout

Generosity: Ask if they have any toys they would like to donate to children who don’t have many.

Recommended read: I’m glad for what I have by Rachel Cruze.

Primary

Children are enthusiastic to learn and enjoy spending money. They crave more responsibility and like the opportunity to earn cash. Here are some tips:

• Provide pocket money for chores
• Write present ideas for relatives
• Show them how to get the best deal when purchasing (such as comparing prices online, waiting for sales, price matching and cashback)
• Visit the toy library together
• Open a bank account for them
• Help them learn about basic budgeting with jam jars. Ask them to divide up their money into spend, save and give (invest is a good one to add too)
• Give them opportunities to earn extra money (lemonade stand, cake stall, garage sale)
• Ask if they have unwanted toys they want to sell to fund new ones
• Teach them the difference between a need and a want

Generosity: Think Kmart Wishing Tree, Operation Christmas Child, Backpacks 4 SA Kids or child sponsorship.

Recommended read: Barefoot Kids by Scott Pape.

Secondary

Teenagers might think they know it all (but we know the truth). Equipping them with the tools they need to manage money is crucial, especially as they gain more independence. Here are some tips:

• Apply for a Tax file number and superannuation
• Help them write a CV
• Open a bank account with a linked debit card
• Suggest work experience or volunteering in an area they are interested in
• Encourage them to apply for a part-time job
• Help them to create a simple budget
• Talk about the need to have an emergency fund
• Open extra accounts, known as sinking funds, to help save for financial goals
• Show how to set up direct debits to both pay regular bills (phone) and save towards goals (buying their first car)
• Talk about the dangers of Buy Now Pay Later schemes, especially with multiple purchases or accounts
• Discuss the dangers of credit cards, car loans and personal loans. Compare how much more they will have to pay over the life of the loan compared to buying outright
• Teach them about the power of compound interest. Talk about options like investing in shares or property. It doesn’t have to be scary. The earlier they start, the better!
• Don’t pay for everything. The bank of Mum and Dad is not a long-term option (at least, not a healthy one). A sense of accomplishment comes with saving up for something themselves
• Allow them to spend their own money and make some mistakes. This is a good learning opportunity while they still have the safety net of living at home

Generosity: Ask your teen to choose a charity to support, like the RSPCA, Red Cross, Dignity, UNICEF, Useful Gifts or World Vision.

Recommended read: The Barefoot Investor by Scott Pape.

Additional resources for parents

Kids Ain’t Cheap by Ana Kresina 

The Barefoot Investor For Families by Scott Pape

The Total Money Makeover by Dave Ramsey

Teaching Kids Good Money Habits by Mario A. Vasquez 

Your Kids, Their Money by Clifton D. Corbin

Mindful Money by Canna Campbell

They Don’t Teach This At School by Myleene Klass 

The Opposite Of Spoiled by Ron Lieber

The Joyful Frugalista by Serina Bird

Rich Dad Poor Dad by Robert T. Kiyosaki 

Our children will learn about money, whether we teach them or not. With a little intentionality, we can help to raise money-savvy kids. Ensuring that we are modelling a positive relationship with money is key. What a gift this will be for our children, no matter what age or stage they are at.

I’d love to connect with you over on Instagram or Facebook. Come and say hi!

This article was recently featured in Educate Magazine.

Melanie Wegener

Disclaimer: Please note that these tips are general in nature and are not financial advice. Please see a professional for advice relevant to your situation and your needs.