How To Raise Financially Clever Kids!

Are you teaching your children to be good money managers or do you have some not so awesome habits that your children will take with them into adulthood?

During their early primary school years, is the most valuable time to start teaching them great money skills, as they absorb so much information and create the patterns for the future.

No matter what your financial past looks like, even if your current situation is far from perfect, your children do not have to suffer the same fate. If your current money habits, create tension and stress, your children will pick up on this, and will develop fear about financial matters.


The following tips will teach your children valuable positive money habits that will last a lifetime.

1. Let all family members be involved in budgeting decisions – Children are really good at wanting everything, now! Help them learn how much things really cost. Show them how much the groceries cost each week, if you are planning a holiday, teach them how to read brochures, show them an electricity bill and explain to them how many other things could be bought for that value, if they want to start a new sport every second week let them see how much it really costs.

2. Start pocket money sooner rather than later – $1.00 for each year of age seems to be the best rate to start with. It is vital that they must contribute to household chores to ‘earn’ their money. Just handing it out, will ensure they expect everything for nothing. Have a list of extra jobs they can complete for a small bonus.

3. Let children decide how they want to spend their money – Decide how much MUST go into savings and then let them decide what they want to spend the balance on. More than likely it will be sweet treats or small toys in the beginning, but as children see their savings grow they will often contribute more of their spare cash to a savings goal.

4. Big purchases must be saved for without a loan from The Mum And Dad Bank – When your child has their eye on a special prize, let them save towards buying it. One of the most powerful lessons to learn is that mum and dad are not an endless source of cash. Even if you have got it, don’t let them know that.

5. Set up a ‘shop’ at home – Get a storage tub and fill it with fun treats from the cheap shop, or when you find things on sale in the shops. Put a price tag on every item, and when it is payday, let your children spend their spare cash in your shop. Offer a lay-by system, that children can contribute a little each week until they have covered the cost.

5. Do not settle the tab of overspending tweens & teens – If they overspend their mobile phone budget, they can live without until the next month. It will hurt like hell, and they will claim they can’t survive, but they need to learn from an early age that you are not a limitless pit, and overspending costs.

5. Open a bank account with a bonus saving account  – both of my teens have a standard keycard account, but attached to that account is a sub-account that is interest bearing. Their savings are placed in the sub-account and they have already discovered the joy of interest being credited to their account for doing nothing other than leaving their cash there and adding to it regularly. Compound interest is a powerful financial tool to creating wealth.

6. Credit costs – Personal loans and credit cards cost, and the sooner children learn about the possible traps, and the high rates of interest that borrowing costs, they quicker they will realise that borrowing for things that do not appreciate in value costs dearly. Saving money for a large purchase is a much better option.

7. Explain your money mistakes and the price you have paid – your mistakes don’t all have to be doom and gloom, but valuable lessons. Let them know that they have choices and that if they want everything NOW, they could create financial disaster for their futures. Debt is one of the biggest causes of stress and destruction of relationships. Knowledge is power, and children have the chance to never be put in that situation if good habits are developed young.

Some of the decisions I made in the past were horrendous, but I learnt well and even though they were very painful for me, my children know all about it and are doing all the right things already. Without a doubt some of the best lessons for my girls and their future has come from the openess in which I have explained exactly what can happen.

Unfortunately schools do not spend much time teaching the valuable financial lessons that children need to be money savvy, it is definately a parents job to ingrain the good habits they can set your children up for life. Make it fun and rewarding and the lessons will be well learnt!

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