Teaching children about money from an early age sets the foundation for good financial habits that will last a lifetime. With the rising cost of living, it’s more important than ever to ensure the next generation understands how to save, spend, and manage their finances. The key is to tailor lessons to their age and developmental stage, making money a practical and approachable topic. Here’s a guide to teaching kids about money at every age.
Ages 3–5: Understanding the basics
At this stage, children are naturally curious but have a limited attention span. While they’re too young for complex financial concepts, you can introduce simple ideas about money and its value.
Key tips:
- Introduce coins and notes:
Show them different types of coins and notes, explaining their values. Let them hold and examine them to understand their physical differences and explain their values in simple terms, e.g., a $2 coin can buy more than a $1 coin even though it’s smaller. - Play games:
Incorporate pretend play with toy cash registers or a “store” at home. Let them exchange “money” for goods like snacks or toys to teach the idea of transactions. - Start a savings jar:
Give them a clear jar to save coins. Seeing their savings grow visually reinforces the concept of saving. - Teach needs vs. wants:
Use simple examples to teach the difference between what someone needs and what someone wants. For instance, we need food to stay healthy, but we want ice cream because it’s a fun treat. Needs will always come first but wants can be important too.
Ages 6–10: Building practical skills
In primary school, kids are ready for more hands-on experiences with money, making it an ideal time to introduce beginner budgeting and saving skills.
Key tips:
- Start a weekly allowance:
This allows them to ‘earn money’ and make choices about saving or spending. For example, it’s an effective way learn about taking the time to save for something more substantial or spending sooner on something smaller. - Set savings goals:
Encourage them to set goals, whether it’s saving for a something specific like a toy, or even reaching a certain goal such as their first $100 saved. Use a chart or app to track progress and celebrate milestones with them. - Discuss bank accounts:
Open a kids’ savings account and explain how the bank keeps their money safe and that interest is a small reward for saving. The more they save, the more they can earn. Keep them engaged with their account balance to build excitement about saving.
Check out our Ziggy Kids Saver designed for kids under 15 years. They can even earn bonus interest if they make at least one deposit and no withdrawals each month.
Ages 11–14: Encouraging responsibility
Pre-teens and early teens are ready to manage money more independently, but they are also heavily influenced by peers and media, so it’s essential to guide them towards wise financial decisions.
Key tips:
- Introduce digital money:
Show them how to use banking apps and debit cards safely. This will give them a real sense of being in control of their money and help them learn more responsibility over their decisions. Make sure to also discuss the importance of cybersecurity, strong passwords and being scam aware.
Learn more about scam awareness and the most popular scams targeting Australians, plus tips to protect yourself from being scammed. - Discuss their ‘wants’:
Help them understand why they want something. Is it something they genuinely want, or is it a fleeting momentary want? Taking 24 hours to sit on it and think about why you might want something can help avoid impulse purchases. - Involvement in family finances:
Getting kids involved in financial discussions and decisions can help them learn in a way that is interactive and real. They will start to understand household budgets, how to prioritise spending and learn money isn’t infinite.
Grocery shopping is another effective way to get kids involved. Teach them how to compare unit prices and to look for weekly specials or discounts, plus where to save money on non-brand name products.
Ages 15–18: Preparing for adulthood
Teenagers are on the cusp of adulthood, making this a critical time to teach them about managing their money independently. These years are perfect for lessons on long-term financial planning.
Key tips:
- Encourage part-time work:
A casual job teaches kids the value of earning their own money. It’s also an opportunity to introduce concepts like taxes and superannuation. Show them how to read a pay slip and explain where deductions like tax and super go. - The importance of paying on-time:
As kids become older, make them responsible to paying all or part of a bill such as their phone, a hobby or a subscription service they might use. This will help them understand the importance of meeting financial obligations. - Credit and debt:
Discuss credit cards, loans, and the importance of managing debt and making repayments on time. This is also the perfect time to explain what a credit score is, what factors impact a credit score and how late payments could impact their borrowing power down the track.
Read our article 'What is a credit score and does everyone have one' to learn why it's important and how it's calculated. - Introduce investing:
Explain basic investing concepts like shares and compound interest, to spark curiosity about growing wealth. Consider setting up a small investment account to give them hands-on experience with guidance to show how compound interest can grow savings over time. - Encourage financial literacy learning:
Help your kids build important financial literacy skills with the Auswide Bank Financial Fitness website. With today’s cost of living pressures, financial literacy is more crucial than ever, yet many people lack the knowledge needed to make informed financial decisions, leading to stress, debt, and missed opportunities. Targeted specifically towards young adults, Financial Fitness has free modules, tools and articles to help them teach them the basics of managing money, debt and understanding common financial language.
Tips for all ages
- Be a role model. Kids learn by watching so be sure to demonstrate good financial habits.
- Use games and challenges to keep them engaged. For example, who can find the best deal at the shops or how fast can save to get to their goal?
- Normalise talking about money at home. Answer their questions honestly and use real-life examples to make lessons relatable.
Why start early?
By teaching kids about money early, you empower them to make informed financial decisions later in life. Whether it’s saving for their first car, managing bills, or investing for their future, the skills they learn today can have a big impact on their financial capability later in life.
Start with small, age-appropriate lessons, and build on them as your child grows. By turning everyday moments into learning opportunities, you’ll equip them with the financial knowledge they need to thrive in a rapidly changing world.
This information provides general advice only. We do not provide advice about this product based on any consideration of your personal objectives, needs or circumstances.
