The most important money lessons you should be teaching your kids

Assisting your child financially.
Assisting your child financially. Photo: Supplied

 Presented by proud partner, Commonwealth Bank

Research shows that children whose parents talk to them about money at a young age have better financial outcomes, knowledge and wellbeing in adulthood. "A young person's early experiences of financial attitudes and behaviours shape outcomes later in life," according to The right start: Youth financial wellbeing report.

With many parents now home schooling during the Coronavirus outbreak, there's never been a better time to introduce conversations around financial literacy to your child.

Here's what you need to know:

Age-appropriate conversations

While the concept of financial literacy can seem complicated, there are strategies that make understanding the basics easy (and even fun), for five-year-olds and upwards.

Julie Kun, CEO of WIRE (Women's Information and Referral Exchange Inc) says it's important to teach kids about respectful and collaborative choice-making around money as early as possible.

"Money conversations with young children don't have to be complex," says Kun. "Many families discuss and compromise on which takeout food they are going to buy. A five-year-old can participate in those conversations."

When it comes to older kids, Kun suggests involving them in bigger household decisions, such as family holidays and the cost implications on the family, plus giving them more financial autonomy.

"At age 11, pocket money can help cement lessons about budgeting and decision making. Talk about a savings plan and earning money that way."


Top tip: Start Smart is an award-winning financial literacy program that teaches kids about good money management. The resources are now free for parents online.

Gender equality

While teaching money basics is important, it's also prudent to teach your kids about financial wellbeing, safety and gender equality.

"Gender inequality around money starts early in Australia," explains Kun. "On average, girls get less pocket money than boys, and girls do more chores to get it – such as caring for younger siblings or housework. Doing chores for pocket money is great, but make sure it is equal among children. Also, all children should feel equally able to be a part of money decisions."

Needs versus wants

Help kids distinguish between 'needs' and 'wants' by categorising their spending. "Challenge your kids to spend to their needs and wait for their wants," advises Kun. "This concept helps them better understand how to prioritise spending."

However, it's important that kids understand that buying a 'want' isn't bad, unless it comes before what you 'need'. The key here is making sure your kids have a firm grasp of what is defined as a 'need' is and what is defined as a 'want', so that they don't categorise a 'want' as a 'need'.

Money's value

Remember when we paid for lollies with coins and groceries with notes? The kids don't! Nathan Barker, head of community investment, at Commonwealth Bank, says "in a world where money is increasingly 'invisible' thanks to payments made by card, online or tapping phones, kids may be less likely to understand how much things cost, where money comes from, and the notion that money isn't infinite."

"I always like to look for teachable moments," suggests Barker. "That might be having a conversation with my little one about money while I'm at the ATM, buying our weekly groceries at the supermarket, or when I'm paying with a credit card."

Financial independence

Financial independence is a really important lesson that most of us overlook when it comes to our financial wellbeing. "Not only do we want our kids to grow up into financially independent and responsible adults, but we also want them to be aware of the dangers that could happen if they lose that financial independence," explains Barker.

Financial independence is something that is learned over time through developed financial capability and financial behaviour, and is likely a concept to introduce to your child in middle school. Key points could include the importance of having emergency savings, understanding your financial position, and crucially, controlling your own finances.

"There are people that take advantage of others, and when this happens on a financial front it's considered financial abuse," Barker warns. "It's really important we remind our kids of basic safety measures, including why we need to keep PINs and passwords safe, how they should always have a say in their financial decisions and the importance of making informed decisions."

Proud partner, Commonwealth Bank. Always consider your personal circumstances before acting on financial advice.

To learn more about Commonwealth Bank's Start Smart program, click here.

Financial abuse is a form of domestic and family violence. If you or someone you know is affected by domestic violence, please call 1800 RESPECT (1800 737 732) or visit In an emergency, call 000.