How to teach your kids about money

Teaching your kids about money is one of those things you need to be constantly thinking about and doing all through their growing years.

Here's a few tips that may help :

Ages 3 - 7
1. Start giving them pocket money from the age of three and set a few small tasks for them to do. This way the pocket money will be seen as a reward for an effort.

2. Tell them why they can or cannot have certain items. They need to understand that money doesn't grow on trees. Wanting is just not enough, they have to make an effort to get those things.

3. Do not give them notes pay their pocket money in coins as they need to understand how to allocate their money.

4. Show them how to allocate their money by grabbing three normal envelopes and have them write on the front what they want to do with the money. It may be a good idea to have them draw a picture or cut something out from a magazine to them visualise their goals. Keep the goals realistic otherwise they will very quickly lose interest. Or buy them a Money-Ed-Box

5. Show them the value of money by explaining what $2 can and can't buy. It may be an idea to do this whilst walking down the super market isle or toy isle (if you are game!). 6. Let them watch you pay for things. You may even start by letting them hand over the cash or pressing the OK button on the eftpos machine.

What they learn - Money simply doesn't grow on trees and that you have to work for your money. They will also begin to understand that you have to allocate your money for different thing and that different things have different values.

Ages 7 - 12
1. Encourage them to participate in the school banking programme. This will give them a sense of regular commitment to savings.

2. Get them interested in looking at their bank statements and following how much money they are saving. This will get them used to scanning banking paperwork.

3. Get them to start thinking of a long term saving goal and work out how long it will take them to reach that goal.

4. Give them a combination of notes and coins for their pocket money. This will really strengthen their allocation abilities and efficient usage of spare change.

5. Start showing them the family bills and explain positively that the bills have to be paid to keep the family going.

What they will learn - Saving is a planned activity and something that needs a bit of thought rather that just putting away what's left over. They will also appreciate the value of small change and begin to grasp the fact that it takes a fair bit of money and good money management skills to keep a roof over their head.

Teenagers
1. Encourage them to set up their own bank account and use internet banking.

2. Direct debit their pocket money into their account. This will get them used to dealing with intangible payments and that electronic money is not just a set of numbers.

3. Make them responsible for their own bills such as mobiles. This is a very quick way to teach them how to spend wisely.

4. Try not to lend money to them for purchases that are of an extravagant nature. If they really want it encourage them to get a part time job to save up enough. If you do loan money to them do so only on the grounds that you will reduce the amount of their pocket money until the loan is paid.

5. Charge them board if they have a part time job - this will start getting them into the habit of paying their way for things they take for granted - like food and shelter!!

6. Introduce them to the concept of return on investment. Show them the value of putting some of their money into high interest savings accounts or even into managed investments. Highlight the fact that if they start now they will be all so better off down the track.

What they learn - Not only will they learn more modern and more efficient banking technique they will learn how to curb their wants or find ways to earn rather than going into debt for something that is not totally necessary. Overall they will learn that it takes money to create money.