How to help your children understand money

Money in a jar

Sophie Burton from Simplicity shares strategies to help children understand money.

If the role of keeping tiny humans alive and thriving isn’t enough responsibility, there are additional things to consider as parents, like life lessons on financial literacy. After all, the more we teach our children about good money values, the more likely they are to grow into financially resilient adults. Here’s some tips on how to talk to your kids about money.

Keep it tangible

Your first order of business is to improve money’s physicality. Today’s paperless, payWave, online banking society places less emphasis on tangible notes and coins.Our kids however, learn through real world experience and for them, seeing and feeling is understanding. Build up a stash of $1 and $2 coins and a few notes and use them to help your kids join the dots between the feeling of wanting something and the feeling of delayed gratification after working for it.

Magic money jars

Introduce four jars for each child in your home to represent spending, saving, giving and growing. Encourage them to help label and decorate the jars while you explain what each jar is for. Money earned around the home gets divided up into the jars. They can then decide what to spend or save for, with a few simple boundaries:

  • The spending jar is for them to use as they decide.
  • The saving jar can be for items or experiences that they want but need to build up a bit of coin for.
  • The growing jar encourages children to consider how money can make money. This could be by way of an investment fund, a KiwiSaver account or buying individual shares on a platform like Hatch or Sharesies.
  • The giving jar instils the ability to think of others from a young age. Let your child make decisions based on what they care about, whether that’s making a donation to a local food bank, or supporting a national animal charity.

Abundance mindset

We all carry a different money story, usually formed from initial experiences in childhood. You may come from a family that stressed about money, or didn’t speak about it at all. We help our kids immensely by approaching topics related to money with a practical, calm, abundance mindset. Instead of the auto response “we can’t afford that’’, try “we need to figure out how we can pay for that”. The latter says to our kids that the world is full of possibilities, we just need to make a few choices first. Most essential to remember is that we, as parents, should try and make ‘money’ an open subject with zero baggage.

Put it in kid context

What’s really important in your kid’s life right now? It might be Lego, it might be having chickens in the backyard. Younger kids may not understand what the word expensive means (after all it’s relative). The expensive toy, when framed with a casual “wow that will cost about 50 ice creams” can offer much needed context for your child. It also nudges them to question whether the fun or novelty value is worth the spend.

Scroll to Top