According to Canstar, the average Australian has personal debt of $17,700 (excluding credit cards and property loans), a mortgage of $565,881 and have a median amount of $5,000 saved. While how much you owe on your mortgage and how much you save each month can depend on a number of factors including age and location, our relationship to money and how we use it is a valuable life skill to learn early on. If you're starting to teach your kids or even grandkids about money, here are a few helpful tips to get you started.
How money is earned
Growing up, many kids might see money as something you spend rather than save. They see us paying for everyday expenses and fun 'luxury' items with cash and card, but might not understand where it comes from or the limitations to what we have. A great place to start is explaining how money is earned, how we use money and that it's not a limitless resource. This can be done while shopping e.g. the money spent is now less than what you started with at the beginning of the week; and through an opportunity to earn and manage their own pocket money.
Earning through pocket money
Nothing quite teaches kids the value of money than when they have their own money to earn, spend and save. Earning money through household chores is something you might already be teaching them, but be sure to sit down and agree on what chores they need to do, how often and when. As they get older, chores may change or you might even negotiate a 'pay rise'.
To further their skills in budgeting and managing the money they're earning, use a simple budget worksheet. You can download a template online or create your own in a notebook using these six headings: 'date', 'description', 'credit', 'debit', 'amount' and 'balance'. This will help them track all incoming and outgoing payments and aid in their financial decision making.
Needs v wants
Even as adults, we all have things we want rather than need but its what we do with those impulses that counts. It's absolutely okay to have goals or things you want, but it's important to address the priority of needs. As kids or teens there won't be too many financial 'needs' they'll be responsible for but teaching them the power of paying for a need such as their own fuel, transport cost or a phone bill will help put in perspective the significance of a need over a want.
Instilling a sense of needs versus wants is also a great tool for setting goals. If there is something they've had their eye on for a while that is above the means of what they're earning then saving up each time they get paid is an effective way to encourage future saving habits. Help them work out how soon they want what they're saving for and how much they're willing to put away each week.
It's important to remember that while kids are learning about money they might make mistakes. Perhaps they decide to impulse buy something that puts them further away from a savings goal. It's great to guide them in the right direction when they're faced with these kind of decisions, but learning from their mistakes
An easy method for budgeting and saving (no matter your age) is bucketing. Check out our article What is bucketing and how can it help you save?
A place to save
When kids are quite young, a transparent piggy bank or jar is an ideal space to store their money so it can help them visually see their money grow with savings and reduce with spending.
As kids get older and need access to a debit card, a savings account will introduce another layer of financial responsibility including how they can earn interest.
Learn about our Ziggy Kids Saver Account, suitable for young savers aged 0-15 years.
Shopping hacks – working out the best price
As your kids start to get a grasp on how money works, teach them simple shopping hacks while you're out getting groceries, such as:
- Finding cheaper brand alternatives for basic household items like cleaning supplies and pantry staples (think sugar, rice, four etc.)
- Using apps or rewards programs to save money on future shops
- Comparing value on similar items e.g. Cost per 100g
- Buying in bulk to save money
- Opting for discounted items where possible i.e. If a tinned product is discount because of a dent
These tips will be especially useful as your kids get ready to move out of home.
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.
Published: Monday, 22 Aug 2022
