How to raise financially savvy kids

By Lacey Filipich

Teaching your children about money is a parent responsibility, for two reasons:

We don’t do it well in school. For the record, it’s been explicitly in the Australian curriculum from Years 1 to 10 since 2011, so we do try. It’s not working well, per our youth financial literacy scores going backwards.
It’s not about the maths. If you passed Year 5 maths, you’ve got all the skills you need to do money calculations. By far the more important knowledge is personal – your values, beliefs, and priorities. Home is the best place to explore those.

Parents may be cursing me now for adding to your already substantial to-do list, but I have good news for you:

You don’t have to be good with money yourself to teach your kids how to be good with money. You only need to be one lesson ahead of them. Also, your mistakes are ripe opportunities to help your kids learn so they don’t have to do it the hard way.
You don’t have to commit enormous amounts of time delivering classroom-style lectures. Instead, you ask questions. You also need to explain the unconscious or invisible decisions you make already.

If that’s not enough reassurance, remember:

Raising financially savvy kids is in your best interests, and theirs. Your child needs to be able to sustain themselves to thrive. That includes managing their money well. No one wants a ‘kidult’ who can’t manage their money and lives at home into their 30’s. That’s a disservice to the child, and an unnecessary burden on the parents.

Here’s a crash course on how to do it:

>> Focus on waste, not numbers.

Long before our kids can add and subtract, we’ve taught them why we turn off the tap and the lights. It’s so we don’t waste water or electricity.

Money is a finite resource like any other. Using it wisely is the most important financial lesson we can learn. Every minute you spent to earn that money is precious – you won’t get it back. Don’t squander that time through frivolous spending.

You make decisions to reduce financial waste every day. When you decide which items to buy at the grocery store, or which petrol station you refuel at, or which insurer you choose.

Get your kids thinking about reducing waste by explaining how you make those decisions.

You can start these chats early. I started with my daughter before she was three.

Next, you want to empower your child, which I why I encourage you to…

>> Avoid the words ‘We can’t afford it’.

The word I object to in that sentence is ‘can’t’. Most of the time, you could afford what your child asks for. It’s not a wise way to spend money because you have better uses for that cash.

What you really mean is ‘We won’t buy that because it’s not the best use of our money.’

This helps kids learn that every spending choice comes with an opportunity cost. That’s the lost chance to spend that money in another way. Which is why we don’t waste it.

It’s empowering to realise you have that choice. It switches your mindset from passive (can’t) to active (won’t), putting the spender in the driver’s seat.

That’s how you want your kids to feel, so they have a chance of dealing with the next problem:

>> Make the invisible, visible.

In my childhood, cash played a much bigger part in life. It was easy to see my parents counting out notes from their wallets at the cash register. Then, they checked they’d received the right change back.

Those days are gone. They aren’t coming back.

But that doesn’t mean you can’t make money’s movement visible in other ways.

A chart on the wall tracking the balance of a child’s saving account is a great example. Putting a dot on the chart means the child looked up the balance and thought about it. It becomes conscious.

And finally, a tip that I suspect holds for most aspects of parenting…

>> Lead with questions, not lectures.

My mum was a master of this. She planted seeds with simple questions that she knew would catch my interest.

Things like ‘What are you planning to do with the money you earn?’ when I started my first business at 10 years old. When I said I planned to spend it, she asked ‘Did you know the bank will give you more money if you save it with them?’

That was her way of getting me interested (ha!) in compounding, and it worked. I’ve saved half of every dollar since.

Find out what drives your child. Ask questions that will get their attention. Keep asking, not telling, unless they ask you to tell them.

For more tips and activities to help you raise financially savvy kids, you’re welcome to check out my blog, book and courses, but the above is enough to get you off to a good start.

May your child’s financial future be bright.

Lacey Filipich is an award-winning financial educator, entrepreneur, author, TEDx speaker and a chemical engineer. Thousands around the world have used her Money School courses to liberate themselves from debt, start saving and raise financially capable kids.

Money School is also the title of her international award-winning book, out now with Penguin Life.

Lacey graduated as valedictorian from the University of Queensland with an Honours degree in Chemical Engineering (if you want to find out how a chemical engineer ends up teaching people about money, check out her TEDx talk.) She is the winner of a 2019 Business News ’40 under 40’ Award.