How to teach your kids about money

How to teach your kids about money

“Don’t give your kids money just for breathing” and other tips on raising money-savvy kids.

BY Business Chicks, 10 min READ

This summary has been prepared by Business Chicks based on Melissa Meagher’s Masterclass, thanks to our friends at AustralianSuper

How were you taught about money?

Did your parents speak about it openly, or was it a closed-door subject?

Whatever the case, your experience has formed part of your money story, and will likely be showing up in your behaviours today.

A child’s brain is like a sponge, and with beliefs formed by the age of seven, parents have an incredible opportunity to shape positive perceptions of money from an early age. Put in the work early, and you can set up good habits for life. In a recent masterclass thanks to our friends at AustralianSuper, we were joined by Melissa Meagher. Melissa has over 20 years of experience in the financial services industry and is the founder of financial coaching business Talking Money. Melissa shared her advice on teaching kids about money and shared the tips she’s using to educate her own kids.

Introducing the concept of money

Money can be a taboo subject. The good news is, you have the opportunity to teach a new generation that it doesn’t have to be that way. When introducing the concept of money, Melissa advised to talk about it like it’s a normal part of life. Talking about it in hushed tones or behind closed doors is likely to contribute to the perception of it being taboo. Our perception creates our reality, so it’s important to be conscious of the statements you use around your kids. A simple saying such as, “we can’t afford it”, can be changed to, “we are choosing to spend on other priorities right now”.

As money doesn’t come infinitely out of the wall (as much as we wish it did!) you should explain the process of spending and saving. Children should be able to touch money, see it and play with it to understand the concept as a real, tangible thing. A clear piggy bank is a great way to visualise this concept. Kids can see it physically growing with each addition and understand the link between spending and a reduction in the total. In our tap-and-go world, it’s so important for kids to understand that there is not a seemingly infinite supply. When you are using the tap-and-go function, chat to your kids about what this involves, and the fact that your bank balance will be reduced every time you tap your card.

Other great ways to introduce the concept of money include:

  • Grocery shopping. It’s one of the best ways to teach your kids about money. Check the supermarket deals together and if you’ve got older kids, point out the dollars per gram price to get them thinking about value.
  • Show your kids an electricity or phone bill and explain that money earned from work helps to pay this. Money doesn’t materialise out of the hole in the wall.
  • Get kids involved with planning an event or creating a family budget together. Getting them involved with the money decisions will secure their buy-in.

The politics of pocket money

 “Don’t give your kids money just for breathing.”

Pocket money earned from chores is a great way to help kids understand the value of work and money.  Keep pocket money framework as simple as possible and teach kids that if the chores aren’t completed to a certain standard, they won’t earn their money. For example you can get your kids to complete three chores a week to earn pocket money or set a certain amount of pocket money to be paid depending on the chore.

Melissa suggested having kids store pocket money into three clear jars – a spending jar, saving jar and a giving jar. Consider matching kid’s savings goals to give them a bigger incentive to save, and make their goals seem more achievable. The MoneySmart savings goal calculator is a fantastic resource for older kids. Additionally, consider setting up a high interest savings account in your child’s name to introduce the magic of compound interest early on.

Wealth is an inside job – the psychology of money

Talk to your kids about delayed gratification and opportunity cost to overcome the, “I want it now” dilemma. That is, if you spend now, you can’t buy something later. Encourage them to be mindful shoppers, getting them into the practice of going away to think through a purchase before opening their wallet. Kids and adults alike are bombarded with items to buy, so instil in them the concept that you don’t need everything right now.

Introduce the concept of contentment and comparison – needs versus wants. Encourage them to be happy and grateful for what they have in their life. Explain the difference between needs and wants by using practical examples that they can relate to. You can also build their social awareness by teaching kids that money can be used to help people. The gratification of giving can outweigh a new possession. Make sure to get their buy-in and involvement on where they donate their money.

Coming of age

As kids move into their teenage years, they will likely want their own financial independence. Melissa shared her personal experience of sitting down with her teen daughter to track what she spends each term (on sport, outings with friends and her pre-paid phone). For Melissa’s family, this was a great exercise in learning how to budget.

Complete a checklist before your teenager commits to a part-time job. As a family, it’s important to discuss whether the job fits in with school, sport and home life. It’s important to be clear on how often they work, and factor in how they will get to and from work (as it will likely fall on the parents to assist!) Get your kids to check in with their employer as to whether they can choose their own superannuation fund. Choose a fund with low fees and consider the benefit of being with a large, member-first fund, as well as the long-term returns and potential net benefit*.

Educate kids about credit card traps. It’s important that they understand the ramifications of taking on personal debt. Many lenders will offer credit cards to university students who aren’t working full time, and likely can’t afford to repay, so it’s crucial your kids are aware of the red flags. Help them to understand the obligations and ramifications of buy now pay later services. They can impact credit ratings down the track, so it’s important that they are educated and informed.

The younger you are educated in smart money habits, the better! By developing conscious spending and saving habits early on, you’ll be setting your kids up for life.


As Australia’s largest super fund, and with a history of strong long-term performance, AustralianSuper is committed to helping members achieve their best possible retirement outcome. AustralianSuper can help you with small, simple steps that could make a big difference to your financial future and set you up for the retirement that’s right for you.  

The views expressed in this article are those of Business Chicks’ guest presenter Melissa Meagher, as at the date of publication, and not AustralianSuper. The article provides general information and should not be considered as financial product advice. Please seek professional advice that is appropriate to your own business and personal circumstance.

* Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.


©2020 Business Chicks

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