5 Easy Ways to Raise Money-Savvy Kids

Let’s face it: it’s hard enough to raise kids these days, without having to worry about teaching them good money habits.

Sadly, many parents tell me they don’t feel confident in advising their kids about money – most likely because this is something they’ve struggled with themselves at some point (who hasn’t?!)

Dave Ramsey, financial expert and best-selling author, summed it up beautifully during an interview with USA Today:

“As parents, we teach our kids about things we feel competent in. That’s why so many parents don’t teach their kids about money. They’ve screwed up with money, so they don’t think they are qualified to teach their kids. But your kids are your do-over. Trust me, I know, you can make mistakes with money and still raise money-smart kids.”

Being both a financial planner and a mum, this is a topic that’s close to my heart. It’s never too late (or too early!) to start a new family tradition of handling money the right way. Here’s how:


  1. Pay your kids pocket money from an early age, but DO NOT link this allowance to household jobs


“What?” I hear you say, “Give my kids something for nothing?!” Hear me out.

Being a member of a family or community requires pitching in, and helping with chores is an integral part of this and you don’t want your kids helping out just to get paid.  I’d suggest a set allowance not linked to chores, with the possibility of earning extra money for additional jobs as they get older.

Children as young as 4 or 5 can learn from managing an allowance. Guide your kids by explaining how to allocate their money for different purposes: some for immediate gratification; some to donate; and some to save for a bigger goal (e.g. an expensive toy or a fun outing). Letting them make occasional mistakes i.e. wasting it on lollies, then missing out that cool train set, is all part of the learning process.

Encourage your kids to donate to a cause that’s important to them – this is a great way to foster conversation around compassion, charitable giving and the wider world we live in; where many others are far worse off.


  1. Space out your children’s pocket money as they get older


Clinical Psychologist Dr Elizabeth Kilbey suggests paying children weekly when young; fortnightly in late primary school; and monthly once they’re in high school.

“There has to be some sense of the real world, and pocket money is a good way to do that as it teaches short- and long-term saving and good spending habits.”

Source: The Guardian

In the ‘real world’ many large companies only pay employees monthly, making budgeting important. Kids can’t learn to manage what they don’t have and you can bet your kids will feel the pain if they blow their monthly allowance in the first week! Less frequent pocket money helps them learn how to plan and manage their money, whilst still in a safe environment. 


  1. Lead by example


Kids learn through observation, and you are their most important role model. Here’s how to demonstrate good money habits (and possibly improve your own habits in the process!):

  • Avoid shopping for leisure (in front of your kids!) for stuff you don’t need. In the same way that some of us eat out of boredom or emotion, most of us acquire ‘stuff’ for temporary gratification. Unfortunately, this can damage our bank accounts permanently! Encourage your kids to spend time with friends, get outdoors and be active instead.
  • Reuse, recycle and re-purpose. Explain to your kids that resources are finite and new things cost money. Convert an old TV unit into a play kitchen; turn some old pants into shorts… Get them involved! Show your kids how a bit of creativity can breathe new life into old things – they’ll appreciate things more if they see the work and time that goes into them.
  • Take good care of your things. You can’t expect your kids to look after their possessions if you don’t look after yours. Buy good quality items and maintain them so they can be reused year after year.
  • Reduce food wastage. We all lead busy lives, and meal planning is more important than ever for budgeting and It’s no secret that kids can be fussy eaters and refuse to eat what is served. Unless your child has special needs or requirements, don’t prepare or buy a replacement meal. Your kids won’t suffer from missing a single meal, despite what they say! If this is a regular event, try seeking their input when meal planning.
  • Have conversations about long-term savings goals. Talk to your kids about the planned family holiday, new car, renovations, etc. and how you’re saving for it. Be transparent and help them to understand the work that goes into long-term savings goals.


  1. Talk to your kids about electronic money and credit cards


It’s easy to feel disconnected from money when it’s no longer a physical thing, however the consequences of mismanaging electronic money are just as real as for the paper kind.

Make everyday transactions an opportunity to teach. When you make a purchase with your card, explain that the amount you can spend is limited by the amount you earn and that actual work is required to make cashless money.

A good way to explain credit cards (particularly to older children) is that they allow you to spend money you don’t have yet; so you ‘rent’ the money, and the ‘rent’ you pay is called interest.  Help them to understand the true cost of not paying down the card by the due date. For example, if you purchase a $500 bike but don’t pay down the interest for 3 years; at 20%, that bike will end up costing $864!  Use a real-life consequence too; e.g. this could be the difference between working for 2.5 days to pay for the bike, versus 4.3 days.


  1. Teach your teens about identity theft


Kids nowadays are true digital natives; unfortunately this can mean sharing a great deal of information about themselves online.  Once a criminal has a D.O.B., a phone number and an address, chaos can ensue if they also manage to hack a password or credit card details. Try to keep close tabs on their online activity and explain it’s important to:

  • keep tight social media privacy settings
  • not use public Wi-Fi for anything that needs a password
  • not accept friend requests (or even respond to messages) from people they don’t know
  • set complex passwords that are difficult to hack.


All in all, with research showing that children copy their parents’ approach to finance, YOUR behaviour is the biggest influence. This may all seem a bit daunting, but you don’t have to face this challenge alone. For further information, links to further reading or educational resources, please feel free to contact me.

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