After my last blog bringing back my own experiences with saving, it brought me to the question about when and how other kids learn about money. Our information evening shows a video about kids on their thoughts about retirement and how much money would be required. It’s very light hearted, but it made me think…when do we teach kids about money? Is this something they learn at school? When is too soon?

Financial lessons that you can teach your kids can be started at the following age groups:

The under 5’s:

• Money is used to buy things. Without money you cannot have things at the shops that you want.

An idea to get them around this idea is to get them to pass onto the cashier when they are buying things like toys or food.

• You earn money by working.

I recall when I was younger when asked my brother said “Milk came from a carton” as this was the only place he had seen milk. I can imagine nowadays that kids would think money was an unlimited source come from a hole in the wall. Explain to the reason you and other adults go to work is to earn money.

• Even adults have a tough time when savings to buy something, but it’s important to teach kids they need to wait before they buy things.

Just because they want a new PS3 game they need to have money for it. The obvious lesson in this is obviously the old savings of pocket money until you have enough to buy that PS3 game…

6 -10 year olds:

• Up until this age it’s very likely that kids will be putting their hard earned dollars into a pig next to their beds. It’s good at this age to teach them about the bank.

Open up a savings account; take them to the bank with you to deposit their money – show them this is how the money gets into that hole in the wall they go to when withdrawing cash.

Also for those of you that aren’t subscribed to our newsletter, we shared a great idea Marvel Comics came up with. Avengers – Save the Day, a comic about money and saving.

• Decision making – its December 26. All those cards with cash are burning a hole in their little wallets. It’s the perfect time to teach kids about choice.

Look through the catalogues to show them stores have specials and that things don’t cost the same everywhere. Also go through how some things are expensive compared to other things – “yes you can a new PS3 game, or alternatively, for the same amount you can have some Lego, Skylanders and some other super hip cool toy.”

11 – 14 year olds:

• Online safety. Kids are observant. At some stage they would have noticed that you have purchased things online. It’s important to teach them the dangers of this and entering details online.

Explain what happens when your details get in the wrong hands (eg people buying holidays and nights on the town with your credit card..)

• Credit cards – what are they and how do they work?

Does anyone recall the episode of the Simpson’s when Bart got a credit card in his dogs name and maxed it out?  Debt collectors came after him and he had to use his dog as collateral!  No? Well it has a Wiki page: it may be worth watching it with your kids (please note, this top tip is from AUNTY Amy not MOTHER Amy, so maybe watch it first and prepare your notes).

• Credit cards are like a loan – credit cards are NOT YOUR MONEY, they are the banks money.

It goes back to the whole teaching kids about waiting to buy things they want. Discuss the reasons why you are using your credit card and when they plan on repaying it, as well the interest involved if not paying full balance on time.

14 – 18 year olds:

• Your first job – now that your child has started working it’s time to reinforce saving.

They may need to start saving for the big purchases like are car. Those generous parents who are going to buy their child their first car, it might be a good incentive to save dollar-for- dollar, so all the money they put away you match. Head to the bank and set up a new account for their pay to be directly deposited into.

• TAX – If I get $7.90 an hour and worked 5 hours, why is there not $39.50 in my account?

It’s worth explaining why taxes come out eg. health care, roads etc. Take them to the accountant with you to get their first tax return done so they can learn about deductions and maybe and instil to them that they MUST get their tax return done every year!!

Hopefully by the time your kids reach 18 they have a pretty good grasp of finances and are equipped to make their own decisions. Things aren’t always going to go to plan, but with these basic fundamentals, they’ll have a good head start!!

By Amy Flett