Positive Money Attitude for Kids

How to Help Children Develop Good Money-Related Habits

Jul 18, 2009

Help kids to have good money habits by discussing money openly, involving them in family expenses, having clear pocket money rules and avoiding bribing them with money.

Parents’ attitudes towards money have a big impact on children. Regardless of the family’s financial situation, it’s important that parents live by example and guide their kids to help them develop positive money attitude and habits when they grow up. Here are some approaches that parents can try.

Discuss Money Openly with Kids

Talking about money can be a sensitive issue in some families, but it shouldn’t be so. After all, the more children know about money, the more they can learn to manage it wisely. Children don’t need details like how much their parents are making, how much savings they have or how much they owe the bank. However, it’s perfectly alright to talk about money matters that affect them, such as their costs of education, family outings, sports and after-school activities.

Involve Children in Family Expenses

As soon as children start learning to count, parents can get them involved in some activities involving money. Try simple things like explaining the value of different coins and notes, comparing prices when the family goes grocery shopping, getting them to count how much their lunch orders cost or showing them how much utility bills the family spends on. Children can be involved in household budgeting and encouraged to work part-time when they are old enough.

Have Clear Pocket Money Rules

Kids learn money management and personal budgeting skills when they have money to spend on things they want. However, having pocket money and knowing how to spend it wisely are two different things, hence the need to set rules on pocket money.

Parents can do this by starting with a small allowance, giving kids separate allowances to spend on different things or stating clearly what the allowance covers. As the children grow older and show better money management skills, the allowance can be increased and the rules relaxed.

Avoid Bribing Kids With Money

Using money as a bribe or reward for kids is a common practice in many families, particularly well-to-do families. However, it sends out the wrong message – that money can buy anything and everything, which isn’t so in the real world. Additionally, kids will mistakenly think that misbehaving is okay because they actually get rewarded with money when they do so or that money is the best reward there is.

Instead, parents should give due punishment when required. Parents who want to reward their children can try offering pleasurable experiences that can be shared with others such as inviting friends home for a play date, dining out with the family or watching a much awaited football match at the stadium.

Parents have the responsibility of helping children to have positive money attitude. They can do this by discussing money with kids openly, involving children in family expenses, setting clear rules on pocket money and avoiding bribing them with money.

Australian Securities and Investments Commission. Understanding Money – How to Make it Work for You. Commonwealth of Australia: 2008.

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