It's not always easy to talk to our kids about money, and when teaching our kids about money we don't always get it right. In fact I'd go so far as to say it's often easier to get it wrong than right.

But it's so important, because one thing we can be sure of is that our kids are going to need to manage money every day of their adult lives. And the way they manage that money will determine their lifestyle.

So my question to you is this - who sat you down and taught you step by step how to manage money?

Who taught you in specific detail about issues such as:

  • Budgeting
  • Shopping
  • Credit cards
  • Getting a loan
  • Living out of home
  • Earning income
  • Investing

In most cases the answer is "no one". If you were very lucky then you may have had a parent help you; or maybe they just taught you their bad habits….

You see managing household finances is not a compulsory subject in schools, so it's up to us as parents. BUT who teaches the parents??

Have you ever found managing money complicated, challenging, or frustrating? 

Have you ever argued over money?

Have you ever cried over money?

Well therein lies the problem – it's up to us as parents to teach our kids about managing money, and we've already established we didn't learn this in school, so we teach by experience, and that may not always be good.

A child's attitude towards money shaped by their parents' attitude and experience.

Ok, let's go back to my question about whether you ever find money management complicated, challenging or frustrating.  You probably answered yes to at least one of those scenarios. Let's think about this – if our own attitude towards money is often negative, what are we teaching our kids? 

Even if our words are positive, our attitude may betray us.

So if you're educating your kids about money, you need to start with the curriculum right? And like any subject, there's a lot involved and it takes years! Let me help you fast-track it a little with - in no particular order (gratuitous reality TV show reference) - "16 things to teach your kids to ensure terrific long term money habits" PLUS an action plan at the end.


1.            To make decisions.

As parents we can see around corners our children can't, but sometimes it's important to step back and let them make their own decisions. This gives them the chance to consider consequences AND make mistakes at a time in their life when it won't cause long-term financial hardship.

2.            To count change

Sounds simple, but this is not a skill that comes easily to everyone and in most cases it needs to be taught. This will save your kids being ripped off, and I think we'd agree this is fairly important.

3.            That earning money is a lot harder than saving it.

So pay yourself first!

4.            The rule of 70/20/10.

Allocate 70% of what you earn to fund your lifestyle, 20% to savings (short-term and long-term), and 10% to purchase insurance policies to protect your lifestyle.

5.            Accept "no" for an answer.

I once heard someone advise parents to go to the toilet if their child kept nagging, because it was the one place they couldn't follow you. I changed the TV station at that point because that so-called expert clearly did not have kids.

Children will nag you absolutely anywhere, and they can be relentless. So I prefer Lynn Lott's recommendation in her book Positive Discipline.

She suggests a dialogue that goes along the lines of:

Mum: "Have you ever heard of 'Asked and Answered'?"

Little Johnny: "No."

Mum: "Did you ask me a question about digging?"

Little Johnny: "Yes"

Mum: "Did I answer it?"

Little Johnny: "Yes, but…."

Mum: "So do you think I will change my mind if you ask me the same thing over and over?"

Little Johnny: "No but…"

Mum: "Asked and Answered

Consistency is key! Once you decide to use "Asked and Answered" with your nagging child, Lott says you need to be sure to stick to it.

6.            How to make choices. 

Of course, you don't always want to say no, or it may not be appropriate. So what about teaching your kids about the need to choose?

For example if you're shopping together for a new pair of jeans, and your child chooses a pair of $100 jeans, take the opportunity to explain they have a choice. They can either have one pair of $100 jeans, or if they're happy to try a different brand or another store, they can have two pairs of jeans for the same amount.

7.            That sometimes you need to come to the party.

If your child requests something expensive and you're not prepared to spend that amount on the item, you could compromise by asking them to come to the party.

For example if your child wants a pair of runners that cost $200, explain that your budget doesn't allow for that. And then tell them what your budget does allow for. So, for example it might be $100 in which case they can either accept a pair of runners for $100, alternatively you will put $100 towards the shoes they really want and they can make up the difference.

Not only is this a good way to teach them the value of money but when they outgrow them in six months it may also help to think a little bit differently …

8.            Don't expect instant gratification

Our kids need to learn that planning is essential when it comes to money. One of the key problems with our modern society is the quest for instant gratification. And unfortunately instant gratification is pretty easy to get with mediums such as credit cards, store credit etc. Start teaching them this as early as possible by making them plan and save for their purchases and expenses.

9.            That you need to be in control of your expenses rather than the other way around.

It's sooooooooooo easy to let things get out of control when it comes to money. The number 1 reason people get into financial difficulty is spending impulsively. Encourage your children to carefully evaluate every expense.

10.          Don't confuse needs with wants.

11.          A credit card is possibly the most expensive loan you will ever take out.


12.          Don't loan money to friends or family.

Any loans to family or friends should be formal; with set repayments, an end date, and interest.

13.          Learn about money.

In this day and age we have great access to information. And when it comes to money, information is definitely power. Money as an abstract concept can be scary, confusing, and complicated, so make sure your kids take the time to learn about money and how it works. This will help them make sensible and well informed decisions which is really all any of us can do!

14.          They should get advice from experts.

…and that may not always be you. Be honest about that, after all our job isn't to always be right, it's to steer them in the right direction and help them make the important decisions in their life.

15.          See a Financial Adviser early.

If you have older children encourage them to find a Financial Adviser they can trust and who can help get them on track financially from the start. A good financial planner doesn't just advise on investment products, but can also help young people recognise priorities, set goals, understand financial concepts, and budget. This is also helpful when they do have money to invest in the future, they will already have a relationship with someone who "gets" them.

16.          Investing versus saving.

Again, this is one for older children. Saving is great, but at some stage they need to use some of those savings to invest for their future. It's important for your kids to learn about income and growth, so that their money doesn't end up going backwards with inflation…

One way to do this is to lead by example. My partner Mick and I set up small share investments in our children's names and then each time a statement comes in, we sit down and explain what's happened to the balance depending on sharemarket movements.

The Pantene™ Principle

It's really important to understand that your children won't necessarily get it straight away they won't become perfect money managers just because you're teaching them well.

Education is about repetition and also about learning from mistakes. What you're doing is teaching them good habits early. And over time this will become natural for them.

It won't happen overnight, but it will happen.

Your Action Plan

Look at the list of 16 money habits and see which ones might be appropriate to start teaching your children depending on their age. Then make a plan for the best way to help them learn, and what resources you might be able to use.

If you have older children, and you would like to introduce them to a financial planner to get them started on the right track, I can highly recommend our Senior Adviser, Michael Crowe, as this is one of his specialty areas. Michael Crowe offers a free "financial fitness" meeting to anyone in their 20s or 30s. All you need to do is call us on 9725 2533 to make a time, or email Michael directly at

Of course if you'd like to hear more of what I have to say on the matter, click here for a recording of my most recent "You & Your Money" radio segment on 98.1FM Radio Eastern.

Talk soon,