It’s never too early to start

All / 05.09.2017

When teaching your children to manage their money you are helping your kids grow into financially savvy adults. You might even learn something about your own money habits along the way.

Children see money nearly every day, and as they become old enough to recognise the currency value on coins and notes they’ll want to start counting – just be mindful that very small children and coins don’t mix well.

If you decide to give children pocket money or to pay them for doing age-appropriate chores, encourage saving by giving them a money-box. Get yourself a money-box as well and each time your child puts money away, do so yourself – and vice-versa. It could be fun!

As they get older, open their own bank account. Explain how interest works and talk about their savings goals. If, for example, they want to buy a new bike, discuss how much it will cost and how much they will need to save each week.

When your child is old enough, introduce them to their bank statement and point out any fees and charges. Children often assume that ATMs supply unlimited cash. When making a withdrawal, show them the receipt and explain how the balance has reduced.

Most kids today have mobile phones. This popular object is a great opportunity to teach them about meeting financial obligations. Show them how to put aside money for bills, and allocating the remainder for savings and spending.

Part-time jobs are a standard way for teenagers to earn money. If you believe they are handling their money responsibly you might consider a pre-paid “credit” card. These work similarly to a credit card except they use the owner’s money instead of credit and are an excellent tool for learning how “plastic” works – when there’s no more left, there’s no more left.

Learning early that plastic money is not limitless can avoid a lot of grief later in life. The Australian Securities and Investments Commission (ASIC) reports that the average Australian credit card holder owes close to $4,300 per card, on which they pay around $738 interest each year! However, not all debt is bad; few people buy a home without a mortgage.

Your child’s first debt will likely be a car. It’s tempting to help financially but you’ll probably do them a greater service by encouraging them to borrow. Not only will they earn their own credit history, they will understand the importance of borrowing, the effects of interest and price.

If you decide to lend them money, establish a repayment schedule and be strict.

Teaching your kids good money habits early is a lasting gift. And as the line goes – if you ever think no-one cares about you, try missing a mortgage payment!

For more information or to speak to one of our Financial Advisers please contact TNR Wealth Management on 02 6621 8544.


Past performance is not a reliable indicator of future performance. The information and any advice in this publication does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. This article may contain material provided directly by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. It is important that your personal circumstances are taken into account before making any financial decision and we recommend you seek detailed and specific advice from a suitably qualified adviser before acting on any information or advice in this publication. Any taxation position described in this publication is general and should only be used as a guide. It does not constitute tax advice and is based on current laws and our interpretation. You should consult a registered tax agent for specific tax advice on your circumstances.

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