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It’s never too early to start teaching kids about money. Read this.

Kids and money. Not a match made in heaven, no. But as parents, one we kinda just have to accept and make the best of.

Yes, we’re going to be talking almost exclusively about the little tikes here, so if you’re not a parent, this is your cue to go outside and enjoy your weekend or the blissful solitude of your couch—whatever you child-free people do. Go on, we’re not jealous at all.

Childhood financial literacy: Your lesson plan

Let’s take a trip down memory lane (we’re not going anywhere else in a hurry, are we). What were you taught about money by your parents? Or teachers?

If you grew up in Australia, you might remember your Dollarmites deposit book, but your financial education probably started and ended there. (Those Dollarmites dollars were questionable to begin with… the real winners, unsurprisingly, were the banks).

We can do better. Let’s make sure your kids understand money in a way we never did growing up. It’s the best head start you can give them. We’ll cover:

  1. Introducing needs vs wants
  2. Getting comfortable saying ‘no’
  3. Piggy banks and other savings plans
  4. Buying and selling
  5. Age-appropriate conversation starters

Chalkboard ready? Let’s go.

1. Introduce the concept of needs vs wants.

We throw the word ‘need’ around a lot. “Oh, I need those new Nikes, they’re perfect”, or “Omg have you seen the new Kmart ottoman? NEED”.

As playful as your tone might be, words carry a lot of weight. Kids are sponges that will soak up every word you say and repeat it back to you. Again. And again. And again.

That’s why it’s important to our words carefully around kids and ensure they know the difference between a need and a want. (The grown-ups might need a little reminder, too).

A need is something we genuinely cannot live without. Food, water, shelter, warmth. Aka groceries, electricity, and rent or mortgage repayments.

A want is something we do not need to sustain life. Toys, video games, fashion trends, jewellery, anything that is a ‘nice to have’ but that with or without, you’ll still be alive in a week’s time.

Of course, not all food is a need, and not all clothing is a want. A loaf of bread is a need, a block of Cadbury is not. School shoes are a need, but trendy runners that you can’t actually run in? Not.

Explaining the difference between these items can be a great, easy to grasp way to introduce your kids to the concept.

2. Get comfortable saying ‘no’.

And stick to it. Because a no does something very important: it places a value on the item in question. If they were constantly given everything they wanted, they’d never see the value in any of it.

They’d never see the work behind the money, the repercussions of spending it (yours, not theirs), and the requests would become grander and more numerous by the day.

We know saying that small, simple word is easier said than done. So here’s a few strategies to add some strength behind that no, tried and tested on my own determined charmers…

  1. Always go to the shops with a plan. Take a list and stick. to. it. This works extra well if you write the list with your kids.
  2. On the way, talk about what you’re going to buy and why you need it.
  3. If they ask for something you don’t need when you get there, hit them with a calm but stern, “No, we don’t need that today. It’s not on the list, remember?”

We’re not saying you can’t ever treat your kids. But make it just that: a treat. When I have a big shop to get through with the kids, we discuss it together and I set the terms before we go. I’ll say something like, “If we get through everything we have to do at the shops this morning, we can stop for an ice-cream on the way home. How does that sound?”

3. Start a piggy bank and other savings plans.

Piggy banks are a fantastic way to teach your kids about money. Kids are visual and they learn so much faster when they can actually ‘deposit’ the money themselves and see their money growing.

It makes money easier to talk about too because it’s always there, offering a physical reminder. They were given a fiver by a beloved aunt? What would they like to do with it? Would they like to buy a lolly or… put it in their piggy? It’s getting so nice and heavy!

Setting up a savings account in their name is also a great idea. You can help them by contributing to it weekly, fortnightly, or monthly as part of an allowance (how good is the Bank of Mum and Dad) and when they’re old enough to start working, you can show them how to add to it themselves.

Regularly discuss the balance together and what they might be able to do with the funds in the future. Are they tempted to use some of it to buy the latest Xbox? Remind them that if they leave the money where it is and keep adding to it, they’ll be able to buy their first car instead.

4. Encourage your kids to buy and sell secondhand.

Has your child stopped playing with a favourite toy and it’s still in pretty good nick?

This could be the perfect opportunity to remind your kids about the value of their things and suggest selling it. Involve them in the process. Let them help you take photos of the item and write an ad, and show them the listing on gumtree or Facebook Marketplace.

Have a chat together about what they can do with the money once it’s sold. Is there something they would like to buy, or would they like to put in their piggy bank or savings account? It doesn’t have to be either/or by the way—they can do both.

Have they sold a bunch of old PlayStation games they’ve grown out of? You could help them choose one new game they’ve been wanting to replace the others with (bonus if they find it secondhand), and save whatever is left over.

5. Start talking about money with these age-appropriate conversation starters.

Piggy banks can only do so much (it’s not easy being that cute).

Don’t know where to begin? Here’s some good starting points, arranged by age.

0-3 years:

  • Introduce those big life events (birthdays, Christmas, Easter) with the magic of experience, not just gifts. Sing happy birthday, go see your neighbourhood Christmas light displays, paint eggs, and leave an impression early about what these events are truly about.
  • Play shop to introduce the idea that things don’t just ‘appear’. Something must be exchanged for them.

3-6 years:

  • Introduce the concept of income with an allowance set via basic chores.
  • Introduce the concept of savings by encouraging your child to set aside some of their allowance.
  • Start looking at price tags together and talking about how much things cost.
  • Play shop and this time introduce the idea that money is exchanged for things. Something they’ll be more familiar with now that they are ‘earning’ too via their chores.

6-10 years:

  • Introduce the concept of banks and banking. Opening a bank account for them is a great way to do this.
  • Introduce the concept of interest earned on savings. The more they put in their new bank account, the more their savings grow, too.
  • Talk about the difference between a need and a want.

10-15 years:

  • When you’re watching TV together, talk about ads and how advertisers use emotional triggers to encourage us to buy things that we don’t really need.
  • Discuss the balance of their bank account together and allow them to buy their own items with their own money (after that very important discussion about needs vs wants).
  • As much as you can, include them in family conversations about finances and the decisions you make.

15-18 years:

  • Now that they’re entering the workforce or preparing to, talk about different budgeting strategies and help them create their first budget.
  • Talk about tax and how it works. (Don’t you wish your parents had done this?)
  • Talk about superannuation and how it works.
  • Talk about investing. What is an investment? What makes a smart one and what makes a not-so-smart one?

Bonnie’s wrap

Caveat here: I’m no expert on children (does such a thing exist??). I’m no schoolteacher either. But I am a parent, so I do have some skin in this game—I know the challenges you’re facing, and I’ve navigated my way through a few of them.

We’re all doing the best we can, and our best is amazing. That includes you. But if my tips make any part of your job as a parent easier? I’ll be one very happy RevUp Advocate (and parent).

And because those big life events require some extra study…

I’ve got some extra tips to cover them.

Kid’s birthday on the horizon?

Birthdays on a budget

And the one coming for all of us…

Christmas on a budget

Related to: Happy Habits
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