How to teach kids the value of money

One of the most important life lessons you can teach your kids is the value of money. It’s a vital skill and one which can set them up for a sound financial future. Research shows that children as young as 3 can grasp financial concepts like saving and spending, so it’s never too early to start.

Here are a few lessons you can teach your kids about money.

Lesson 1: money doesn’t grow on trees …. or ATMs!

In this ‘tap and go’, cashless era, kids often don’t see physical cash, so it’s understandable that they don’t make the connection between money and its purchasing power. Because they don’t see where money comes from, they can mistakenly believe that money is unlimited (if only!).


Try to use physical cash as often as possible – handing over money in exchange for something can help your children grasp the concept of money and understand what things actually cost. They will come to learn that money doesn’t just magically appear.

Lesson 2: anything that’s worth having is worth saving for

Learning to save money is a vital life lesson, and one that will pay off in their future. 

A great way to start is to give them a piggy bank or open a savings account for them so they can learn about saving and watch their money grow. It also teaches them how to separate savings from everyday transactions.

Help your kids set some financial goals. They will learn that going without smaller, less-important things is worth it when there’s something bigger and better waiting for them in the future. Help them plan their spending, which is also a powerful motivator for saving.

Technology and saving

In this digital age, there are stacks of money apps that teach kids the value of saving in a fun and engaging way.
There are apps designed for all kids of ages which make the process of saving, budgeting and spending a fun game. There are even digital piggy banks!
There are too many apps to mention, so just google ‘money apps for kids’ to find one that will suit you!

Lesson 3: let them work for the things they want

Most of us grew up having to earn pocket money in order to buy the things we wanted, and it’s a great way to learn about the value of money. Earning money helps kids understand its value. Depending on their age, give them tasks to do such as:
making their bed each morning

  • taking out the garbage
  • sweeping or vacuuming the floors
  • washing the car 
  • mowing the lawn
  • walking the dog

Only give out pocket money when the task has been completed and to a certain standard so that kids learn that if something is worth doing, it’s worth doing properly.


When teenagers get their first job, they’re tempted to spend all their money at once. Teach them the importance of not blowing their entire pay packet and setting aside a certain percentage (20% is a good rule of thumb) to put into savings. That way, they can still enjoy their new-found financial freedom but also set up responsible saving habits. Helping them set up a bank account and put money aside regularly is a great foundation.

Lesson 4: needs and wants are two very different things!

Another valuable lesson is how to identify what are needs versus wants. Needs are things that we cannot live without: food, clothing, shelter being the main ones. Entertainment and toys are most likely not needs! 

You may wish to cover off on the difference between ‘needs’ and ‘wants’, help them work out examples of each and encourage them to stop and think before they spend their pocket money, learning to prioritise what they spend their money on.

Another important concept for kids today is ‘delayed gratification’. We live in a ‘have it now’ society, with everything available instantly, so teach your kids that the ‘need it now’ mindset will not help them achieve bigger financial goals down the track.

Other tips

  • Set an example - remember that kids observe and copy your behaviour so it’s important to demonstrate responsible saving and financial habits.
  • Get the kids involved with budgeting (such as a birthday party or going to the Easter Show) – set a budget and work through the costs involved (such as food, entertainment and decorations) so they can see how much it costs and how to make savings by comparing prices.
  • Set some challenges - while you’re out doing the grocery shopping, work on some practical skills by showing them the different prices for similar items so that they can compare prices and work out which one is better value. Make it fun by setting challenges to find the best bargains. Be proactive and set an example by saying things like ‘we don’t really need this’ or ‘I think we can find something a little cheaper than this one’.

Disclaimer:
The information on this page has been issued by Maritime Financial Services Pty Limited (MFS). It contains general information that doesn’t take into account your individual objectives, financial situation or needs. It’s important to consider how appropriate this general information is in relation to your situation before making an investment decision. We recommend that you seek financial advice before making any decisions regarding your super or investments. The information on this page is current at the time of publishing.

 
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