At what age should you start teaching your kids about money?

When you were a kid, did you have a piggy bank?

How about a Dollarmite account or were part of another school savings program?

These are the furtive seeds taken to educate our children about money.

So what exactly do we teach our kids about money? And when should we start?

When it comes to finances, we don’t want to stress our kids out.  But every step our kids take from university through to their retirement will be directly influenced by their ability to manage their finances, credit cards, jobs, mortgages and savings.

The more integrated finance is into a child’s daily life, the more comfortable they will become with managing their own finances as an adult.

So here is a breakdown of what to teach our kids and when:

Babies: Probably not ready for fiscal responsibility just yet but if they can master a few words and walk by two years, you have the foundations in place.

Toddlers: Here is a great place to introduce the concept of money to our children. We need money to buy things like food and toys, and that we have to work to make money to buy things.  The key here is to start the conversation and what the expectations are with your own budget (“Honey, we can’t get that toy this week BUT if you help Daddy with the dinner tonight we can put some money aside for it next week”)

Also, use money or loose coins to help kids learn to count. Be warned though – shiny coins are often snuck away by toddlers.

Primary School: A client of mine introduced me to a great system she has for her kids. Firstly, they have to do chores in exchange for pocket money. Now with the pocket money, the kids can’t just go carte blanche at the lolly shop they must do the following: share, save, spend. She has three mason jars set up for each kid and they have to divide up their pocket money evenly. At the end of the month, they get to spend from their spend jar and get to choose a charity to give their share money too. A monthly trip to the bank to deposit their save money is also a highlight as they can see the growth of their own personal wealth.

Teenagers: Here is a chance for your kids to earn some real money with real consequences. It is time for a part-time job where they are able to start making their own financial mistakes and learn from them.

Talk to them about the cost of things. How much is a house worth? How much money does it take to live for a week, month or year on the average Australian salary.  Honestly and transparency is what helps adults remain accountable so treating your teenagers in a similar way can support their financial position as adults.

Raising financially savvy children involves teaching them a variety of aspects from budgeting to planning, earning and saving. Besides giving them an understanding of the value of a dollar, teaching children about fiscal responsibility helps prepare them for life in the real world. Money management is a vital life skill and it is never too early to teach kids about economics.

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This blog contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. If you decide to purchase or vary a financial product, your financial adviser, and other companies within the AMP Group may receive fees and other benefits. The fees will be a dollar amount and/ or a percentage of either the premium you pay or the value of your investment. Please contact us if you want more information.