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When we think about the best gifts for our kids, we often imagine the latest gadgets or unforgettable experiences. But while these bring short-term joy, one gift will last a lifetime: Teaching them about money.
Financial literacy may not have the thrill of a new toy but it’s an essential skill that builds confidence and independence. With rising living costs and economic challenges, it’s more important than ever to equip our children with money-management skills.
Most of us didn’t grow up with formal financial education, learning instead through trial and error, often at a high cost. Teaching kids about money early helps them develop smart habits, make informed decisions and approach financial challenges with confidence.
Money skills also encourage responsibility, self-control and independence. From saving pocket money to budgeting for a car or college, the lessons you share now will shape your child’s financial habits for life. Here are some practical steps:
Make money conversations normal
Money can be a taboo topic, but it shouldn’t be. Incorporate financial discussions into family conversations by talking about budgeting, expenses, the reasoning behind financial decisions and even mistakes.
For younger kids, explain why you choose certain products over others while shopping, highlighting the difference between needs and wants. With older kids, involve them in financial decisions related to the household, such as planning a family budget or discussing upcoming expenses. This not only teaches them practical skills but also allows them to see the real-world application of their lessons.
Make money fun
Transform financial learning into an exciting experience by introducing games and simulations that bring money management concepts to life. Classic board games like Monopoly give hands-on lessons in budgeting, investing and risk-taking, all while players enjoy friendly competition. When learning about money feels like play, it builds confidence and is more likely to keep your kids engaged.
Set up a savings account or KiwiSaver
Give kids hands-on experience with money by opening a basic savings account for younger children, allowing them to see their savings grow. This encourages saving and teaches them banking basics.
For teenagers, a KiwiSaver account introduces the benefits of long-term saving and investment. They’ll learn about compounding interest and understand the significance of starting early, with tangible goals like saving for a home deposit.
Encourage kids to earn money
Kids who earn their own money tend to value it more. Encourage them to explore ways to earn, such as chores, babysitting or part-time jobs. For younger children, consider creating a family business at home where they can sell lemonade or crafts. This teaches them basic entrepreneurship while providing a fun, practical lesson in earning money.
Teach budgeting early
Budgeting is a foundational financial skill. Help younger kids create a simple budget to save for a toy or treat, guiding them to set aside a portion of their pocket money each week. As they grow older, budgeting can cover larger expenses like school supplies or trips. Kid-friendly budgeting apps can help them track their income, expenses and savings goals.
Encourage smart spending choices
Teaching kids to spend wisely is as important as saving. Encourage them to compare prices, look for sales and consider second-hand items. A useful technique is the 24-hour rule: if they want to buy something non-essential, wait 24 hours to think about the purchase. This helps curb impulse spending and fosters thoughtful decision-making. Involve them in grocery shopping, giving them a budget to manage while making choices about what to buy.
Set realistic financial goals
Help your kids set financial goals, whether short term (like saving for a toy) or long term (like contributing to their education fund). Goal-setting focuses their efforts and provides the satisfaction of achieving something they’ve worked towards. It reinforces planning, saving and the importance of delayed gratification, teaching them that good things often take time.
Teaching kids about money equips them with the tools to be confident, independent and responsible adults. Financial literacy enables informed decision-making, avoiding debt traps, and capitalising on wealth-building opportunities. Kids who understand money are likely to grow into adults who manage it effectively, creating a culture of financial empowerment that can benefit families for generations. And importantly, they stop relying on you to fund their lifestyle sooner!
Regardless of your child’s age, it’s never too early or late to start teaching them about money. The lessons don’t need to be complex or formal; they’re often best taught through every-day interactions and real-life experiences.
So, when considering your next gift for your kids, think beyond toys and gadgets. Instead, offer them the knowledge and skills to manage money wisely. It’s a gift that keeps on giving long after the latest tech toy has lost its charm.
Lisa Dudson is an investor, entrepreneur and author of eight bestselling personal finance and property investment books. She has been a media commentator on financial issues for more than 20 years and is known for pragmatic, meaningful and easy-to-understand financial advice. She is a director and shareholder of Saturn Advice and National Capital and provides financial and property advice through her consulting business www.acumen.co.nz
Lisa’s advice is of a general nature, and she is not responsible for any loss that readers may suffer from following it. She cannot correspond directly with readers or give financial advice.
