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Good financial habits to pass on to your kids

Good financial habits to pass on to your kids

By Kirsty Lamont

Teaching your kids about money can be just as important as maintaining their health with a well-balanced diet. Children grow smarter every day and encouraging them to practice good money habits now is a great way to help them stay in control of their finances later on in life.

 

But the question is what lessons should you be passing on? And more to the point, how? Well, every family works differently, but below I’ve outlined some money lessons that get taught in my household, and might be worth introducing in yours as well.

 

Lesson one: Money is earned through hard work

 

Sometimes it’s easier to give kids everything they want, especially if there’s a tantrum at the checkout involved. But by doing this, you may be encouraging a negative attitude towards money and entitlement, when really, kids need to understand that money and any financial reward is earned through hard work. 

 

Teach this by assigning small chores to your child, like cleaning their room or stacking the dishwasher in return for pocket money. Once they complete their chores, explain that the pocket money is theirs to put towards something fun, like that new Hatchimal collection they’ve had their eye on.  

 

Lesson two: Money also means responsibility

 

There’s nothing a child looks forward to more than playtime and these days that often means plugging in their tablets or switching on the computer. While you want your kids to have fun, it’s also important for them to understand the impact their energy usage has on household bills.

 

Simply explain to your little ones that each time they turn on a light or open the fridge, they’re using power, which costs money. You could even use your most recent energy bill as a visual cue to help do this. Consider bringing them along to the bank or post office to teach them how to pay bills, or have them by your side if you do your banking online.

 

Lesson three: The difference between need and want

 

Kids look up to their parents, so when they see us overspending, we’re almost giving them permission to do the same. It can be tricky for us to display mature financial habits while out and about but the more you do it, the more your children are likely to mirror this down the track.

 

But even if you’re one to splurge occasionally, you can instill in your children the satisfaction of a well-earned purchase. Set a budget together based on pocket money earnings and get them to jot down their savings goals. If there’s a new game or toy your child has their eye on, encourage them to put away a little bit each week. Explain to them that straying from the budget will place a delay on whatever it is they are saving for.

 

Lesson four: The benefits of saving

 

If there’s anything most kids have in common, it’s that they want everything ‘now’. But what they can come realise is that their savings have the potential to grow over time with the help of interest rates and effective saving strategies.

 

One way to encourage your child to develop healthy savings habits is by opening a kids savings account. Depending on the bank or provider, these accounts don’t charge monthly fees, have a bonus interest rate and offer kid-friendly tools to help them understand how much they’re saving. Having the financial responsibility of owning a bank account can also help them avoid future traps, like credit card debt.

 

Banks like St.George, BankSA and CommBank offer savings worksheets, online games and budget planners. Then once the account is up and running, show them their regular statements to help keep them feeling motivated and in control of their finances.

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What tips do you have to teach your kids the value of money in a cashless world? Join the conversation on our forum! 

Kirsty Lamont

Kirsty Lamont is a Director at financial comparison website mozo.com.au. She is passionate about helping Australians get a better money deal and helping them make better, more informed choices.

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