02/08/2016 1:54 PM AEST | Updated 03/08/2016 12:38 PM AEST

Why We Need To Teach Our Kids About Money In Early Childhood

Whatever you're doing now, it's probably not enough.

Images By Tang Ming Tung
Start 'em young.

As Madonna so wisely observed in 1984, we live in a material world.

Fast forward 30-odd years and it's a statement that rings truer than ever, as products become increasingly disposable, trends even more fleeting and instant gratification a consumer's right.

With a ferociously fast turnaround on social media, what was a must-have today can be passé tomorrow, and keeping up with the Joneses is a 24-hour, seven-day commitment. Not to mention an expensive one.

It's enough to make anyone's head spin, but according to Jenny Brown from JBS Financial Services, it's young Aussie adults who are really struggling to keep up, largely because their knowledge and understanding of financial matters (including the simplest of budgeting principles) quite simply isn't up to scratch.


"We are seeing more and more clients where the kids have moved out but then have had to move back in again," Brown told The Huffington Post Australia. "And I think that comes from them not necessarily understanding what that cost of living is.

"Do our teenagers and young adults really understand how much things like rent or electricity or gas cost? I don't think that's explained enough, or early enough.

"A lot of it has to do with going through those household budgets and showing them what goes in and what goes out. Simple as it is, I don't think it's something that's fully understood. It's like kids that run up massive phone bills -- they don't realise that data usage and mobile phones add up to a sum of money at the end of each month which they then have to pay."

While trends are nothing new, Brown says the popularity of social media has sped up the cycle during which a certain product or look is considered 'in'.

"Fads come in and out -- that hasn't changed -- but it seems to be a lot quicker today than 20 years ago," she said. "You need to keep spending money to keep up. Of course, that's not necessarily what needs to be done, but it can be hard to realise that when you are at an impressionable age and you've got peer groups and peer pressure to deal with."

@kendallandkylie swim @topshop June 9th!

A photo posted by King Kylie (@kyliejenner) on

New day, new product to buy.

The key, according to Brown, is to start the process of financial education young -- and probably younger than you think.

"It is so important to understand budgeting from an early age," Brown told HuffPost Australia. "Kids these days are very much 'I want I want I want' but if you can set out a plan whereby you say, 'okay, if you want that bike, I will give you some money for your birthday, but you will need to save the rest and I will help you figure out how to do that', that can be a really important lesson.

"It's about teaching kids that, whatever the newest latest thing is, a) they don't have to have it, or, b) if they really want it, they need to work for it and save for it."

Pocket money should not be a given... Kids shouldn't be able to just put their hands out.

While Brown is pro-pocket money, she also states it is not a hand-out and needs to be earned.

"Pocket money should not be a given," Brown said. "Kids should have to work for it. Depending on their age, it might be as simple as a rule where no clothes are to be kept on the bedroom floor.

"Or it could be emptying the dishwasher or taking the dog for a walk. Small jobs that aren't onerous but shows they are contributing to the household and making a difference. That's good for kids who are of a younger age -- just to explain that you have to earn it, and it's not a given, it's not a right."

Brown advises increasing those responsibilities as the child gets older, so as to avoid the situation where "a teenager thinks they are entitled... kids shouldn't be able to just put their hands out."

Mieke Dalle
Pocket money should be earned.

Once they get to working age, Brown says encouraging your teen to take on a casual job is a great way to learn about the concept of earning money in the real world.

"I've had my kids come in and do scanning on public holidays and they get paid for it," Brown said. "There are plenty of opportunities out there for kids to earn some money.

"Not only does it help them understand what the value of money is, it also teaches them good life skills for when they enter the workforce later on."

"I had a client once in her late twenties who was $60,000 in debt. She had no house and no assets to speak of, but she wouldn't stop spending.

According to Brown, the concept of credit (and debit) is another extremely important lesson to explain to children as they get older, once again to avoid that misconception of "free money".

"It is by far too easy to get credit these days," Brown said. "Whether it's credit to go and buy furniture or an easy Visa card or Mastercard. Rather than getting debit visa cards or Mastercards, I see so many young people always living on their credit. It's a real issue.

"If you haven't been taught about the real, finite amount of money coming in, and the finite amount of money going out, and to only spend what you are earning, debt can escalate and be a problem alarmingly quickly.

"I had a client once in her late twenties who was $60,000 in debt. She had no house and no assets to speak of, but she wouldn't stop spending.

"It's vital we educate people from a young age not to put everything on credit, to understand the value of money from an early age and to delay gratification where possible... otherwise we can expect to see more and more of our kids leaving home and running into real trouble."