How to teach kids about money

Many parents aren't confident when it comes to teaching money management skills.
Many parents aren't confident when it comes to teaching money management skills. Photo: Stocksy

Knowing how to handle money is a very important life skill, despite this some kids think "money comes from a machine in the wall."

While new survey results from the Commonwealth Bank show that parents believe kids should be taught money skills from a young age, just over half of parents surveyed said they weren't confident in teaching their children money management skills.

This is something high school teacher Jenny Rolfe knows all too well.

As part of the Commonwealth Bank's Teaching Awards program, Rolfe has been recognised for her contribution to developing the essential money management skills of her students.

From her research Rolfe discovered many parents often feel uncertain about how to teach their children financial skills.

Building on this knowledge, the Wagga Wagga Christian College teacher will be developing a program that gives parents the tools to work collaboratively with the school to teach kids everything they need to know about managing money.

"Children should be taught [financial skills] right from the very beginning," said Rolf. "Just like we teach them self-hygiene and about cars and road safety.

"I actually think we should start teaching them good money skills even before they start school."

Five ways to teach kids about money

Talk about money in everyday interactions

For parents wondering how to teach kids about money, Rolfe says a key place to start is with everyday interactions.

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"Different things will work for different kids," said Rolfe. That said, "shopping is a fantastic opportunity to teach kids about money and the value of money."

While at the supermarket talk about how much things cost with your children, look at different prices and encourage them to shop around.

Let them pay for items with cash

If your child wants to buy something, Rolfe suggests giving them the money, getting them "involved in the physical transaction".

This makes it easier for children to get their head around how much things actually cost.

According to the Money Smart website, children 'might see this invisible money as an abstract and unlimited resource rather than real money coming in and out of their family's bank accounts.'

Explain how many days you have to work to afford certain things

For older kids, next time you receive your electricity bill you could discuss how much it was and how many days you had to work to afford it.

"This will help create a connection between time spent at work and money, as well as the fact that electricity and the internet cost your family money," says the Money Smart website.

Discuss the difference between needs and wants.

This is something everyone can relate to. From a young age, kids should learn about prioritising needs and wants.

The Commonwealth Bank blog suggests practicing this skill with younger children by getting them to help you with the weekly shopping.

Have them collect all the items you need for home. Once that is done, explain there is enough money left over for one item they "want".

Pocket money

For older kids, using pocket money can be a great way to teach them how to budget.

You could try giving them enough money each week to cover their phone bill and bus money. Sit down and help them write out a budget that also includes some savings and spending money.

See more:

Buy Nothing New Month: seven ways to do it with your family

Money-savvy children want financial literacy lessons in school