How to teach kids and teens about money management

Estimated reading time
 5 min

In this article

• Developing smart saving habits to teach money management to teens
• Building financial resilience
• Separating 'needs' from 'wants' to maximise saving potential
• Managing debt before they can access a credit card
• Be the 'household accountant'

Oh, to be young again. When summer holidays lasted forever, TV shows were hosted by puppets and a bag of mixed lollies in the local milk bar would cost you less than a buck.

Back in the day, the milk bar was a major source of childhood joy. It was also the site of many financial awakenings: save your pocket money and get some of the ‘good lollies’, or splurge on a bunch of the cheaper ones.

But the world has grown more complex – and expensive – and helping our kids find their feet financially has become trickier too. It’s never too early to start teaching money management to kids or to start investing in their future. From world travel and university, to buying their first home right through to retirement – there are years of financial tests ahead, so let’s help them start off on the right foot.

1. Developing smart saving habits to teach money management to teens

It’s no secret that today’s generations are growing up in an expensive world. From higher living costs to rising house prices - learning how to manage money is essential to living a happy and financially viable life.

So when it comes to saving, we can at least teach them good money habits and how to be SMART with how they save from a young age. And by that, we mean using the SMART goal setting method to save:

	Specific: Being clear about what they’re saving for - and why.
	Measurable: A set figure to aim for – and if it’s not a locked piggy bank, then the ability to track both savings and spending to monitor their progress.
	Achievable: Don’t overreach – make it achievable so they can meet their savings targets.
	Realistic: Base the goal on the current situation, not an ideal one. How much money do they know they can get from their pocket money rather than hoping the Tooth Fairy will give them an advance?
	Timely: Set a savings deadline. It helps to provide motivation to keep going.

So, whether it’s a new video game or a cricket bat, try using the SMART method of saving the next time your child wants to buy something for themselves.

2. Building financial resilience

Building financial resilience is about being able to manage money through a crisis. It can start with something as simple as accumulating a $1,000 savings buffer to use in case of emergency, and extend to all the little things you do to boost your resilience – like a budget. ANZ’s research found that even this can be a massive boost to your financial wellbeing, and yet 14% of Australians have no savings at all.

While us adults can check our Financial Wellbeing Score to understand our current financial situation, it can be a bit trickier with our children who have no bills to pay. So how can we start helping them understand the concept now? Encouraging your kids to squirrel away some of their savings for a rainy day, even while saving toward a goal can help them to develop these good habits.

3. Separating 'needs' from 'wants' to maximise saving potential

This is something your kids might already be doing – or might already be ignoring. But there’s no harm in a gentle reminder. Despite the familiar ‘less lattes and smashed avocado’ lines from some of their parents, research has found that young people are the demographic spending the least on non-essential items. But growing up in a world with the internet of things at your fingertips plus buy now, pay later means constant temptation—so it pays to remind. The earlier they can identify the difference between something they want and something they need, the better off their budget skills will be. This will help set them up for bigger investments later in life too, like a puppy or car.

4. Managing debt before they can access a credit card

Debt these days is kind of like your kid’s socks – somehow everywhere. So, learning to understand and manage debt is essential. Avoiding debt is a good habit, but also knowing more about the nature of debt can lead to better decisions in the long term. While the methods of accumulating debt may not be the most exciting bedtime story, it’s helpful to teach them about it before they get to an official borrowing age. Maybe you can even put this into practice by lending some money for a treat which has to be paid back by completing household chores. Just be sure they keep those promises (otherwise you might discover dirty laundry hiding under the bed)!

5. Be the 'household accountant'

Another important tip for our kids is making sure that their bank accounts are set-up to help them save. This is really helpful when teaching money management for teens or older children who may be earning or close to earning their own money. Having accounts assigned to everyday spending, larger expenses or savings goals (like that gap year trip or uni books) and general savings are all important for learning how to track spending and stick to savings targets. The more detail we can encourage younger people to dig into, the more savings they will accrue as they grow up. This can be a lesson they take from you, rather than one they action on a day-to-day basis.

As part of the ANZ Financial Wellbeing Program, we have a number of tips, tricks and calculators to help you make the right decisions for you, no matter what stage of your financial journey you’re at. Best of all? Improving your own financial wellbeing now can help you impart better habits to your kids as they grow up. And if you need help financially planning your family, we can help with that too!

Help your kids and teens save with our easy-to-use budget template. You can download this below!