How To Teach Kids About Money

16/03/2016 10:06 AM AEDT | Updated 15/07/2016 12:51 PM AEST
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Young girl putting coins int a piggy bank, Cape Town, South Africa

kids and money

Who else remembers how much pocket money they received as a kid? Or the experience of finding a gold coin left by the tooth fairy? Or saving up to buy that thing, whatever it was, that Mum and Dad wouldn't buy you so you had to save up all by yourself?

If any of these memories has struck a chord, it might be because money is a larger part of the average Australian childhood than you might originally think.

"What we have found is that your childhood experiences play a significant role in shaping attitudes, beliefs and behaviours about money," Sunitha Chamala, financial planner and member of the Financial Planning Association of Australia told The Huffington Post Australia.

"These habits stick with you for life, and establishing those habits in children is much easier than trying to change them down the track. Changing bad habits later on is much harder than instilling them from the beginning."

As a parent, Chamala says one of the most important things to do is to avoid raising your kids with a false sense of entitlement.

"You don't want to encourage a situation wherein kids feel entitled to expensive toys, gadgets or trips without having to earn them," Chamala said. "As this can mean they grow into adults who live beyond their needs, get themselves into debt and live paycheck to paycheck."

"You also want to encourage delayed gratification as a concept rather than instant, and to help them identity the difference between what is a need and what is a want.

"It's important also that children understand you need to work to earn money, as well as concept of saving for rainy day."

Of course, much of this is easier said than done, especially as a parent who wants to give their child the world.

"It is difficult from a parents position, because you want to give your child everything possible," Chamala said. "However it's really important to encourage your child to work towards a goal, especially if it's something like saving for an item that falls into the 'want' category.

"If your child wants to buy something, you can help them to save money from their birthday money or weekly allowance, or offer them the opportunity to earn extra money for helping around the house.

"By involving them in the purchasing process, you are helping them understand the value of a dollar and what that means in the wider scope of things."

kid with piggy bank

"And this is an advance for washing Daddy's car..."

Lessons surrounding the relationship between children and money shouldn't begin and end with pocket money, either, but be carried through into young adulthood.

"I think it's a great idea to encourage teenage children to get a casual job," Chamala said. "It can be up to them whether they spend or save that money.

"It just helps them establish those habits themselves rather than being lectured by the parents.

"In saying that, it's important to practice what you preach by demonstrating and reinforcing attitudes in the home.

"If you adopt a consistent approach to your attitude towards money, this will be reflected in your child's attitudes towards earning, spending and borrowing money."

Of course, all of this isn't to say a child needs to save up for every single thing their heart desires. After all, many things considered pretty normal in an Australian household these days, such as a tablet, would be way out of reach for a child subsisting on pocket money and/or the minimal casual wage at Macca's.

"When it comes to expensive gadgets and games, most kids don’t have hundreds of dollars lying around," Chamala said. "But it's still a good idea to have them contribute to those things.

"For example, you might buy them an iPad, have they have to contribute $50 towards the iPad before they can get it.

"Basically you’re trying to avoid that instant gratification that will flow into adulthood. If you don’t earn it, you don’t deserve it."



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