Feb 17, 2019

Our Insights

What we teach our kids about money and wealth early in life will have a big influence on their future for better or worse, writes financial adviser Ben Calder.

From an early age, children are exposed to advertising and the pursuit of material things, and our goal as parents, and influential adults is to help our them understand the value of money and how to best manage it.

If kids develop a solid foundation of financial skills and an understanding of wealth principles from an early age, they will be more prepared to face the financial challenges of adulthood. Not only that, understanding the basics of budgeting, saving and investing will help them prosper.

So if you have kids under your influence, where do you start?

Here’s five ways to teach kids about money management and wealth

Provide pocket money 

Providing pocket money at an early age is the perfect way to teach them about the principles of earning their own income and managing their own money. Concepts on budgeting, goal setting and saving can all be introduced around the earning of their allowance.

Linking pocket money to chores or tasks will help them understand the relationship between hard work and financial rewards. That said, it is not necessary to connect a payment to all or just any household chores. Helping out around the house should just be a fundamental part of living with a family, so ensure earnings are linked to jobs over and above their basic responsibilities!

Occasionally, offer your child an opportunity to make a small amount of extra income by doing an extra chore, and help them decide what to do with the extra money they earn. Get involved and discuss what they want to use their money for and help them reach that goal. Offer to set apart some of their pocket money into a savings account to help them put funds away for a significant and exciting purchase.

Set up a savings account

Open a savings account for your kids and teach them about interest, bank fees and how to use their accounts. It can provide a great source of motivation if your child understands that their money will grow over time if they don’t touch it, and the more they deposit, the more they’ll receive back in interest.

Inspire entrepreneurship 

Encouraging a child’s entrepreneurial spirit is a fantastic way to develop early business instincts.

Helping them to start their own small business, like the old lemonade stand idea for the younger children, or babysitting or lawn mowing service for the older ones, can be beneficial as kids will start understanding how economics, profit and loss and customer service works. Above all, entrepreneurship is about problem solving, and this is something everyone needs to learn!

Lead by example 

Kids pick up most habits from their parents, as scary as that may be. So, when it comes to money and spending habits you will need to lead by example. It is important to be open with your children about your financial decisions and the lifestyle you’re living.

Describe the family budget and how much things cost, such as bills, shopping and other expenses. Show them how you rationalise purchases, and why you choose to buy one thing over the other. If you are investing, explain your approach in simple terms. Be open about your mortgage payments, financial goals, retirement plans and how that impacts what you do with money. Teach them as much as you can by using yourself as a real life example.


The fastest way to financial independence is to build a budget, and stick to it. Your kids need to learn this as soon as possible. Depending on the age of your children, you may be able to help them create a list of their own monthly expenses, and then list their monthly income (from pocket money or a part time job). This will demonstrate how much money they have coming in and going out in each month. With this information, they can better figure out how much they would like to put away in their savings and what and how they can spend their money.

Get advice

An experienced financial adviser can help you set up a wealth plan for you and your whole family, putting everyone on the right track for success even from a young age.

Calder Wealth Management are the wealth experts, and can help you set up and manage your budget strategy. Call us on (08) 8373 3333 to schedule your free initial appointment. 

Written by Ben Calder, Private Client Adviser at Calder Wealth Management.