Teaching kids about money

More than ever before, it pays to teach kids the principles and skills they need to manage their money in the future. But you don’t have to be an expert yourself to get your kids started. All you need is the time it takes to introduce them to the ideas involved.

These eight tips show how easy it can be to introduce your children to basic money management.

1. Encourage your kids to save for things they want.
   Try to make it fun – consider incentives and rewards, but do what you feel comfortable with and can afford.
2. Use everyday encounters to help kids learn about money.
   Make informal money lessons from visiting a money machine, or opening bank statements or bills. 
3. Explain interest.
   Kids need to know that you can earn interest by saving, and that you pay interest when you borrow.
4. Be aware of money personalities.
   Encourage your kids to be aware of the relationship they are developing with money – are they more inclined to spend or save? Different personalities may require different approaches.  Do the Money Personality Profilers on Sorted – there’s one for kids and one for adults.
5. Talk about money with your kids.
   It's from discussions about subjects like “How much money do you make?”, or “Why can’t I have one?”, that children learn their most lasting lessons about the value – and the values – of money.
6. Be consistent.
   If you’ve made a rule or an agreement about money with your kids - be decisive and stick to it!
7. Keep records.
   Encourage your kids to keep written records of income and expenditure to get into the habit of account-keeping. Show them yours.
8. Find out what's happening at school.
   Schools also have a key role to play in encouraging financial awareness.

The Retirement Commission’s free, independent website, www.sorted.org.nz, has a special section called Kids & Money. It includes nine fun, interactive online games aimed at children aged from five to 12.

So if your kids are at a loose end these school holidays, why not use the time to help them learn money management skills – and have a bit of fun along the way.

Published 21 September 2007