This is the best time to teach your kids about money and it's earlier than you think.

When my younger son was five, he begged me for yet another toy. I asked how he thought I was going to pay for it and he said, "You just tap that plastic thing and you get money." Cost of living crisis? Solved! 

My kids are nine and eleven now, and I like to think they’re a bit more money-savvy. But then they go and spend all their birthday cash on Roblox, and I realise, perhaps not.

I’m not alone. Research from Kit, a pocket money app built by CommBank, shows that one in four parents are worried that they’re ill-equipped to teach their kids about money in the digital age. While my family is a work in progress, here are some things I’ve learned about raising money-smart kids.

Start money conversations early and keep them positive.

If your preschooler can sell you a plastic apple from their toy supermarket, they’re ready to start talking about money. Kids generally understand the concept of exchanging coins or notes for something around the age of four, and that’s the ideal time to get the conversation started. It may seem young, but we’re not talking about crypto assets and the stock market here; we’re keeping it light, positive and part of our daily routine.

I try to integrate money conversations into my family’s daily life. When we’re at the supermarket, I explain why I’m choosing a product that’s on sale. When I get paid, I explain how I’m budgeting until my next pay. I try to frame the conversations in a positive light because I know that if I have a positive attitude towards money, it will rub off on my kids.

Focus on autonomy and fun when teaching money skills. 

Image: Supplied.

Kids learn by doing and are far more receptive when the learning process is fun. While my kids aren’t receptive to lectures, they value independence and would do anything for more gaming time. That’s why we recently started using the Kit app, built by CommBank which comes with a physical prepaid card that helps kids aged five to fourteen learn, earn, save and spend mindfully. 

My kids can easily tick off jobs around the house to earn regular pocket money and put it towards their own savings goals. They can also withdraw money from ATMs, tap to spend in stores or add their card to a digital wallet. Kit also encourages kids to complete Money Quests, which are in-app gamified lessons that teach financial concepts in a fun and interactive way, like how to create a SMART savings goal.

We’ve been using Kit for about a month now (I got 12-months free Kit membership as an eligible CommBank Yello customer), and I can already see a difference in my kids’ money mindset. They’re keener to tick off jobs, saving more, and buying less.

Split your kid’s household jobs into standard and supercharged. 

Image: Supplied. 

Research shows that one of the best ways to improve the financial capability of kids is to give them pocket money and help them decide whether to spend or save it. Paying kids for household jobs can be a contentious topic because it sends the message that helping out around the house is optional. We get around this by setting clear expectations and offering bonus incentives.

Our kids earn $10 a week in pocket money for a list of non-negotiable jobs like making their beds, cleaning their room, setting the table and putting their clothes in the wash. We also have a number of ‘pick your own adventure’ jobs which are above and beyond the usual. For example, they can choose to walk the dogs for $10, give Mum a massage for $5 or pick up the dog poo for $2 per turd. While the poo hasn’t proved popular, the dogs are exhausted, my shoulders are relaxed and my kids have all my disposable income.

Encourage delayed gratification to boost savings.  

Delayed gratification has been a hot topic since those professors at Stanford whipped out the marshmallows. I would have failed. As a third-generation impulse buyer, I’m striving to raise kids who take after their thrifty accountant dad. The key to raising good savers is helping them understand that saving now leads to bigger rewards later.

My sons are currently saving for an outdoor ping pong table and need regular reminders that every time they spend money on toys, the ping pong dream is postponed. Delayed gratification can be tough in a digital world where we’re constantly nudged towards short term satisfaction, but it improves kids’ financial literacy and overall confidence.

When my kids use their Kit card, I show them the balance before and after they make a purchase. Seeing their balance go down encourages them to value the funds and think more carefully about what they’re buying and what they’re saving for.

We should never underestimate our kids’ ability to understand and manage money. The earlier we get the conversation started, the better. With a bit of effort, we can all raise kids who feel positive and confident about money. Kids who aren’t calling us for a loan every month in their 20s… and 30s. Kids who have the knowledge they need to build the future they want.

Sign up for a 30-day free trial with Kit, built by CommBank or check out the free 12-month Kit membership for eligible CommBank Yello customers.  

Read the T&Cs, FSG, PDS and TMD here and consider if Kit is right for you. Issued by Hay Limited. Fees and charges may apply. Any advice given is general in nature. Offers may vary at any time. Full terms and conditions and details on how to activate the offer here. CommBank Yello is a customer recognition program offered by Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945. Eligibility conditions apply, see here for full terms and conditions. 

Feature Image: Supplied.