The early experiences children have with money can shape their financial behaviour as adults. So as a parent, you play a vital role in setting them up for future success when it comes to finance.
It sounds like a big task but talking to your kids about money and teaching them the essentials doesn't need to be complicated. Start young and make it fun.
You might think your toddler is too young to learn anything about money, and mostly you're probably right. But it's not too early to start getting them comfortable with the idea of capitalism. The earlier you can sow the seed, the less chance they take part in a communist revolution. And since you're reading this guide, I'm sure that's not what you want.
Plastic toy supermarket setups have been a kids' favourite for years now. Whether you go for the whole checkout area, produce and all, or you just buy the till and use groceries from around the house, helping your kids to be aware of how we pay for things is a good first lesson.
Please remember that toddlers will stick anything in their mouths and could end up swallowing a coin or two. So please be careful and perhaps consider some of those larger novelty coins or some fake notes.
The point is to get them used to the idea of exchanging money for goods.
You can also get them an abacus. Pretend it's 1920 and people still get things like an abacus. They're colourful, they make clacking noises and you can get them started on counting.
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At this age, they'll have started developing a concept of money and understand it can be used in exchange for things – meaning you can begin to exploit them.
In all seriousness, this is a great age to be playing games with your kid. Get them involved in the everyday activities you do, like your trips to the supermarket. Read aloud the price of items in the shop and let them count the money you'll need at the checkout.
You can even get them to look over the receipt. This'll help them begin to understand that items have different costs and that some things are more expensive than others.
It's also a good age to get them a piggy bank. This gives them a safe place to keep and save money.
Everything is contactless and cashless these days. Having actual money around is good when you've got younger kids. Cash is tangible and physical – the concept of monetary value, not to mention basic counting, is much easier to grasp with coins and notes. Don't worry, they've still got plenty of time to become familiar with debit and credit cards.
It's time to take them to the bank. Help your child open a savings account if you haven't done so already and get into a routine of making deposits.
Involve them in the process. This could be something as simple as logging into the account with them and depositing some money. Alternatively, go old school and visit an actual bank.
Make sure you explain the value of doing this. You don't need to get into the specifics about interest (or compound interest) just yet. So long as they understand that the money you put into the account is growing, you've done your job at this point.
Teaching your kids about the value of money is really important. Research from the Financial Basics Foundation shows children learn best about financial concepts if they are given real-life examples. One way to do this is by comparison shopping.
Don't worry, we're not going to plug our financial comparison site (we do have an excellent kids savings account guide though). We're referring to shopping more generally.
Clothes stores, op shops, supermarkets – these are all places where you can encourage your kids to look at prices and compare the cost of similar items with one another. What do they think is good value for money? Is it worth paying more for a better quality item? These are everyday thoughts to us (especially in a cost of living crisis) but they're still really new concepts to your child.
You can also get them to do more chores around the house for pocket money. This can be a good way to show that money needs to be earned and not just given (at least until we all get a national living wage).
If you're an idealist that doesn't want to link pocket money to chores, that's okay too. Maybe chores are a combined family effort and you want them to help out because you're trying to nurture a compassionate and caring individual. Maybe you want your child to do chores for the collective good of the family, not because they're being paid.
Regardless of what you do, seriously consider giving your kid pocket money. It helps them begin to grasp its importance and think for themselves about how they want to spend it.
You can also talk to them about how they might want to split up their pocket money between what they can spend and what they save.
Worried about moulding your child into a selfish money grubber? Encourage them to donate some of their pocket money to charity. Show them how money can be used for good, not just buying things.
It's unlikely you've convinced your teenager to invest all their pocket money into stocks. Maybe though, you could encourage them to pick something else to save for, like a concert or video game.
Even if they plan to put the money towards some expensive fad they've been marketed, it's worth tolerating. Saving is a really valuable habit for young people to get into.
It can often feel like your teenager is taking things for granted. Talking to them about the family budget, getting them to understand how much everyday stuff costs, can make things a lot easier. Show them where your money goes, where and how you compare prices while you shop, and show them how you pay bills.
Talking of bills, this age isn't too early to get them to compare prices for you. One idea is to encourage them to look at your existing bills, see if they can find a better price elsewhere and then share the savings with them as a reward.
Have a conversation about the value of the items they use too and who will cover the costs. Should some or all of it come out of their pocket money? Encourage them to think about what they value most and what they could do without.
Sadly, schools can't do the heavy lifting for you. Financial literacy isn't included in the Australian Curriculum. Instead, lessons are incorporated into maths, humanities and social sciences (HASS), digital technologies and numeracy.
At this age, your teenager is probably much more independent with their money. They're able to go out without you and spend. Hopefully the lessons you've taught them so far means they're being sensible about where their money is going!
You might get them their own debit card at this point or you can choose a prepaid card. They'll get their own debit card, so this is where you need to sit them down and explain that tapping that piece of plastic really does count. It might feel like you're not spending, but oh boy can those quick taps add up.
Explain how they need to keep an eye on their transactions, how having multiple savings accounts can help you track your savings and how compound interest means the more you keep in your savings account, the more you earn.
This also might be the time they get their first job! With a much larger amount of pocket money coming through, chat to them about how they allocate their income. You can try the 20-30-50 rule, but those numbers may not be as useful for someone not paying rent or a mortgage.
But really, this is the time you want to give them more space to manage things on their own – while still being there to check in and guide them where needed.
Some good news: Australia is among the most financially literate countries in the world. 64% of people are considered financially literate, according to the Global Financial Literacy Excellence Center. Unsurprisingly, the Scandinavian countries Denmark, Norway, and Sweden rank highest, with 71% literacy, followed by Canada, Israel, the UK, Germany, Netherlands and Australia.
Even by 18, your kid is still likely to have questions about money and finance. You don't need to have all the answers. By this stage, your kid knows that (probably a little too well).
It's also nice for them to know they've got someone in their corner though, there and ready to help – even if you're considered old, out of touch and you've no idea what they're talking about 90% of the time.
From age 18, they may be ready to start looking where they can invest some of their money – but unless you're experienced in that area yourself, this might be something for them to talk to a professional about.
Head to our parenting hub for more family-related financial tips.
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