As kids, we learn a great deal about our values from what our parents do and say. And while providing perfect examples to follow might be an unrealistic goal, most of us can get by when it comes to demonstrating respect, kindness, determination and many other important values. But are your own money habits setting a good example for your kids? And even if you are a model citizen when it comes to saving, spending and budgeting, is it enough to instil a positive approach to money in the next generation?

Getting the balance right – apathy vs anxiety

There’s growing concern that kids and young adults growing up in the age of tap and go technology aren’t learning fundamental money and life lessons. In a survey of 1100 teens more than half of them didn’t understand just how long it takes – and how much it costs – to clear credit card debt when you only repay the minimum each month¹. So it’s easy to get the impression young people don’t really know or care what happens when you spend more than you earn and get into debt as a result.

However, chances are many Australia kids will come from a family where debt and financial stress are a concern. With our average amount of household debt reported to be more than twice what it was 12 years ago², it’s hard to see how they can learn to be careful spenders and savers from Mum and Dad. And they may also be picking up on their parents’ concern about family finances and learning to feel anxious about not having enough money.

A healthy attitude to money

To get the balance right between anxiety and lack of engagement on money matters, clinical psychologist and author Dr. Shefali Tsabary has some sound words of advice for parents. “[Money] can only be effective in our lives if there are clear boundaries” says Tsabary. “I always tell [my daughter] that there’s enough money for every single thing you desire. But the key is to know what we truly need and then wait for what you need and create a plan for it in the future. But it is always a yes. I always want to create a sense of abundance. It’s always a yes, [but] it may not be a yes right now³.”

Hearing this, many parents might fear their kids are going to feel even more “entitled” to getting what they want. But as Tsabary explains, it’s actually a strategy that can encourage kids and teens to be grateful rather than grasping. “I do believe that much of our fear around money comes from the state of scarcity that parents create in their children, and actually they make them more thirsty for it rather than making them feel like ‘I have enough and be grateful for what I do have,’” she says⁴.

Pocket-money protocol

For many families, introducing pocket money is the first chance children have to learn about money boundaries and creating a plan. Having the patience to let those gold coins pile up can certainly help you learn that buying what you want takes patience. But parents can be quite divided on whether pocket money is earned or given freely. Should your pocket money system teach kids you have to work to earn? Or do you expect kids to muck in and do their bit for the family regardless of whether they get paid for it?

This is where other values start to become part of the money lesson and choosing which one to teach is very personal. Do you value a strong work ethic more than commitment to family? Chances are you both are important to you and choosing which to put first is tricky. If that’s the case, then perhaps you can introduce standard chores kids will do without payment but offer opportunities for them to do extra chores in order to earn.

Money lessons from the classroom

Kids can certainly learn a lot from parents about healthy money habits. But they’re likely to have better knowledge and self-control when it comes to their finances when they’re experimenting with money management in the classroom too. This is where tools like Banqer’s financial literacy software can really make a difference, for kids and their teachers.

Banqer’s founder Kendall Flutey developed the product to offer schools a comprehensive, flexible and user-friendly “sandbox” environment for teaching important financial concepts. “In order to ensure a standardised level of financial education is received by every child in Australia, I believe the place for financial lessons to be learnt is in our schools,” says Flutey. “Schools can play a really strong role reinforcing the normalisation of financially focused conversations. And it can act as the sandbox environment, a place where kids can make monetary mistakes, understand the consequences and learn from the experience.”

Both teachers and students at Ringwood North Primary School are reaping the benefits of the Banqer approach to starting financial literacy early. 26 year-old teacher Ben Allen used a manual ledger as his system for teaching the basics of money management for four years. Since local financial planner Corin Jacka CFP® of Priority1 Wealth Management Group introduced Banqer to the school, Ben has enjoyed even more opportunities to teach financial concepts in the classroom and won back hours of precious time in his busy schedule.

“Banqer is a much simpler way to keep track of all this,” says Ben “It’s a great addition to our program and helps the smooth running of things. I love how we can see, access, pay and monitor students’ accounts and how it is all in one central location. I also like how there are different modules, including tax, super and income. I think it is a very comprehensive program with lots of lifelong financial skills being taught.”

And the verdict from the student perspective? 10 year-old Abbey started using Banqer in Year Four at Ringwood North. Since then she’s made saving money one of her most important goals, when she’s not busy with sport or soccer. “Banqer has really taught me a lot of things,” she says. “How to save money using an account and how to use money in a wider range of ways.” Abbey has also changed her spending habits as a result. “I should save my money for a big purchase instead of wasting it on smaller purchases,” says Abbey. “If you keep putting your money aside your savings will grow.”

Looking for ways to help your kids get money-wise? Discover some more money lessons for kids and get tips for teaching your teen to manage their finances when they’re heading off to uni

¹ ABC News, Cashless kids: Is tap-and-go technology promoting financial illiteracy?, Kathy McLeish, 17 August 2017 http://www.abc.net.au/news/2017-08-17/cashless-kids-what-is-tap-and-go-doing-to-the-younger-generation/8812168

² News.com.au, ABS Research reveals household debt has doubled over 12 years, Sophie Elsworth, 13 September 2017, http://www.news.com.au/finance/money/budgeting/abs-research-reveals-household-debt-has-doubled-over-12-years/news-story/43f29dc69102cf86ef2184bbdf78b244

³ Business Insider Australia, A psychologist explains how parents can teach their children to value money without being greedy, Emmie Martin, 11 January 2017 https://www.businessinsider.com/how-to-teach-children-to-value-money-without-being-greedy-2017-1#fy6w4l4SZQueUmPI.99

⁴ Business Insider Australia, A psychologist explains how parents can teach their children to value money without being greedy, Emmie Martin, 11 January 2017 https://www.businessinsider.com/how-to-teach-children-to-value-money-without-being-greedy-2017-1#fy6w4l4SZQueUmPI.99