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How to educate your children about money

Making sure your kids are money-wise is an invaluable gift.

By Penny Lewis
Unfortunately, financial literacy isn't a topic you'll see on your child's school curriculum.
So it's time we take charge of the money lessons we've learnt over the years – saving, applying for home loans, paying off credit cards, etc – and pass them down.
Banking expert Kylie Macfarlane reveals where to start, how to make lessons stick and what to avoid at all costs.

Financial lessons can start from an early age

"It's never too early to start teaching your kids about money," says Kylie.
"Research has shown our early experiences with money can shape how we view and approach money management as adults. As the mother of four-year-old twins, I started introducing concepts such as 'needs' and 'wants' from three years of age."

Make it fun

Parents who teach their kids about money in a fun and engaging way can have a positive impact on their children's financial knowledge, outcomes and wellbeing later in life.
"You might want to make savings a competition to see who in your family can save the most," suggests Kylie.
Tracking results with a whiteboard and rewarding kids with an additional boost to their savings if they reach their goal ahead of time or pick up extra chores around the house can make it a positive lesson.

Encourage savings goals

Encouraging your children to start a savings account will set them up for life.
"The first step is to get your child to set some savings goals," says Kylie.
"Have a conversation with them about what they'd like – that might be something small like a new game app or something
a bit more expensive like a new bike."
Next, Kylie suggests helping them map out a plan to achieve their savings goal.
"Come up with strategies and plans to put away small amounts of money regularly so they can build a savings habit," she adds.
"And remember to reward their savings behaviour through praise or even matching them dollar for dollar."
A further incentive for little ones is to match their savings coin for coin if they do extra chores.

Capitalise on teachable moments

Use relevant life events to talk to your kids about money.
"For instance, buying a first car is a great opportunity to talk about insurance and personal loans," says Kylie.
"When your child gets their first job, have a chat with them about superannuation."
There are, of course, other teachable moments where you can have the money talk. And even when you're not actively teaching them, they'll also be picking up on your financial behaviours.

Keep it relevant

Similar to the above, make sure you're not teaching your child money lessons that don't apply to their life stage.
"Talking about superannuation in early primary school will not be as effective as the lesson isn't relevant," Kylie reiterates.
It is also important to speak with your kids about financial wellbeing and safety.
"This covers everything from cyber safety to how to have positive money conversations later in life," tells Kylie.
"In the same way we teach children about appropriate physical and emotional boundaries, we should also teach them to set appropriate financial boundaries."

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