Blogger Q&A: How I'm teaching my kids about money

By Emma Lunn

Financial education is the subject of much debate at the moment, with many pundits calling for personal finance to be taught in schools.

In fact, statistics cited by the Personal Finance Education Group (PFEG) tie early formal financial education to a slew of things that are good for society. Those who took a personal finance course are more likely to plan for retirement, pay credit card bills on time, complete income tax returns correctly and seek financial advice when they need it, PFEG claims. teaching-kids-about-money

Yet even those pushing for money management classes in schools can probably agree that money education begins at home -- and that parents can teach (for better or worse) by example.

We spoke with Fiona Service, a self-described "hippy mum struggling through life on a budget" who writes the Budget Mummy Blog. She shared some of the admittedly tough yet age-appropriate money lessons she's teaching her 8-year-old son and her 6-year-old daughter. What questions are your kids asking about money? How do you answer?

Fiona Service: Why does that machine give you money, mummy? Can we just get lots out?" And, "When Daddy gets a new job and we have more money, can we not eat pasta?"

We are very frank about money and tell them exactly the situation (age appropriate, of course). We feel that we have to deal with things as a family and that they should learn just how it is. What's your tip for making learning about money fun for kids?

Service: We have a money counting jar -- the children earn money for chores, or exceptional behaviour or achievements. They also lose money for bad behaviour. They love putting the money in and see it go into the right slot and bring their total up. At what age do you recommend teaching your children about money? How does this change as they get older?

Service: We started as soon as they were aware of money (about 4 years old). We are discussing more about saving their money up for things and thinking hard about what they are buying -- is it worth it? How do you teach your kids about saving what they earn?

Service: We discuss saving by pointing out that if they want that particular thing, they need to save for it. We celebrate when they have achieved their goal and really highlight it. We also discourage them blowing their money on silly things. Do you have any concerns about your children's attitudes about or understanding of money?

Service: I wish I didn't have to be so tough on my kids about money. But as we live on a very tight budget and I really want them to be prepared for life, we really make the effort.

See related: Parents do more harm than good by shouldering kids' debt, Should you get your child a prepaid card?

Published: 9 July 2012