Financial Education

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Talking Money with Kids 4-8

How to Talk Money With Children - Part 1

(Reading time: 3 - 5 minutes)

Over the next few months we will be providing some helpful tips on talking money with the 3 age groups - Children 4-8, Tweens 9-12 and Teens 13-18.

Part 1: Children (4-8)

Digital money is making it harder for children to grasp the value of real money, according to two thirds (66%) of Australian parents.
FPA Share the Dream Report 2018

The first five money lessons to teach kids

Teaching children about money can be a challenge, especially if you are pressed for time. So how do you pass on good financial values early on, no matter what? Clinical child psychologist Emma Spencer shares her advice.



Talk about where money comes from and how you earn it. At age three to five, children are mentally developed enough to start learning what money is for, where it comes from and why we need it. Explain the relationship between adults going to work and being able to buy things for the family.


Explain the difference between needs and wants. We live in a society where every new product is heavily marketed, creating temptation. It’s up to you to teach your children what is a necessity and what is a luxury—and to explain that even basic necessities need to be paid for.


Don’t mollycoddle your kids. You can’t shield them from reality and then expect them to go out and become resilient humans. If they run out of pocket money before the end of school holidays, don’t give them more.

Children need to be taught how to become independent. That won’t happen unless they learn to take responsibility for themselves.


Show good financial practices. When I go to the supermarket, I put my youngest in the shopping trolley and ask him to hold the money I will pay with.

Include your kids in tangible money activities because children learn by observing and imitating adults.


As early as four or five, explain financial concepts to help kids learn basic life skills. For example, let them sit down with you and watch you pay bills — in paper or online — and show them the family budget.

If you’re out shopping and you need to make a choice between two items, talk to your child about which one you are choosing and why.

Money talk is easier when it’s about everyday things!


How to introduce basic money concepts early

Children pick up basic financial concepts, such as value and exchange, as early as three years old. By age seven, many of their attitudes and habits are set.

Here are some practical exercises from the team at Banqer, to help your child grasp the value of money.


Give your child a piggy bank with sections for saving, spending, and sharing. Now set rules for each section. For instance, the sharing section could be where they draw funds to buy friends’ birthday presents. This will give kids the chance to experience and understand the different value that each option offers.


Now give your child a small amount of money to manage each week. Use a combination of notes and coins so they can learn about physical currency.


Carry cash and use it to pay for things occasionally. As an exercise to help children grasp how money works even when they can’t see it, show them an item and then show them the exact value of that item in cash.

You can say, “Today I am going to pay with this card, and it is exactly the same as if I were paying for it with this money”.


Talk about choices. Explain the reasons behind your financial choices so they develop an understanding of concepts like budgeting and saving, and can engage with the choices you’re making.


Have a family money jar and encourage your kids to make personal contributions. Explain that the money will pay for family outings like picnics, movies or holiday activities. This is a great exercise for learning the value of money. Also, your child will have much more appreciation for the things you do together as a family, if they feel they have contributed financially.


Next month we will be covering the next age group Tweens ages 9-12.

Download the eBook - How to Talk Money with Children PDF

Download the full report on research into raising the Invisible Money Generation - FPA Share the Dream PDF


Need some help on how to guide your kids be money wise?

Why not give us a call and arrange to speak with one of our advisors, contact us on 02 9328 0876.

Article by - FPA and Money & Life |

General Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information. Please seek personal financial advice prior to acting on this information.