Five Principles To Raise Money-Savvy Kids By

Being money smart is an essential life skill and being able to teach this to your children is a wonderful gift. Not only is being financially confident and informed important for your children’s financial health but also for their general wellbeing.

The American Psychological Association (APA) recognises that financial stress has an impact on people’s health and wellbeing and continues to be the most cited cause of stress. The most effective solution to financial stress is prevention.

ASIC’s MoneySmart has some great teaching resources to increase the financial literacy capabilities in young Australians but there are also some simple things you can do to teach your kids to help them become money savvy.

These tips are based MoneySmart’s five basic principles: planning, saving, spending, investing and donating.


Once your child can add, subtract and count money they can start getting some experience in planning by creating a holiday spending budget or weekly pocket money budget to manage over a period of time. Allowing your kids to make their own financial decisions can help them to see the benefit of planning.

If you have older kids, get them involved with the family budget. Doing the grocery shopping with you this is a good place to start. Together you can write a list, devise strategies to get more for your money and watch how much you spend. As an incentive to stick to the budget, you can even split the savings to add to their pocket money!


Saving can be a difficult concept for young children to understand as their concept of time isn’t fully developed. But although they may not understand what it means to live through “a week” or “a month” they will start to learn delayed gratification as they put money aside for a special toy and then they will see value of saving.

Show them how to practise saving daily so that it will hopefully become a positive lifelong habit. As an example, choose to make a less-expensive meal during the week and put the money towards buying ice creams on the weekend – and explain your actions to your kids. Kids need to understand the rational behind your financial decision making for then to do it themselves.


After your kids have helped with the grocery shopping you might find them comparing prices at the toy store or when choosing their own clothes to get the best price. Also encourage them to think about what they want to spend their money on and look for ways to reuse existing toys.


Where possible seize the opportunity to show kids of all ages how money can grow over time. By helping your child to save you can show them how putting some of their money aside into a high interest account will make their money grow!

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Your kids will first start to learn the concept of sharing with their siblings or friends by sharing toys. This teaches them thoughtfulness and generosity. Encourage your kids to also give to community groups, buskers or not-for-profits. Let them choose who they will donate to. If they love animals they may want to put some of their pocket money aside each week for the RSPCA or setup a cake stall outside your house to raise money.

Modelling good financial decision-making is so important. Make sure you involve your children in your financial decisions so they can learn from you.

Whatever approach you decide to take to teach your kids about these five foundations to being money smart just remember that personal experiences are what they will remember most.

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