This is an article with interview from several finance experts which covered some tips and ideas on how to raise your kids to be financially savvy. Link to the article can be found here: http://www.kidsonthecoast.com.au/read/parenting-files/article/raising-financially-savvy-kids

1. READPARENTING FILESRAISING FINANCIALLY SAVVY KIDS
Raising Financially Savvy Kids
25 August 2015
Adulthood comes with many challenges, with fiscal ones right there at the top
of the list. So how do we ensure our kids are financially savvy and ready for the
big wide world?
Parents of young children hear it all the time. “Can I have this?” It’s the
catchcry of many a young child, and one that sometimes works and sometimes
doesn’t depending on the suitability of the item in question, energy level of hit­
up parent and cost of the chosen toy/food/random implement. There it is. The
dreaded ‘C’ word. And, whereas in the innocent world of our little cherished
bambinos, the word does not exist (or if it does, does not have meaning), in the
big wide scary grown­up world, it totally does. In fact, it not only exists, it pretty
much goes to the heart of every household decision made, and while we all
know that money doesn’t make you happy, a lack of it can certainly make you
hapless.
So, when is the moment that we pull our kids aside to lecture them on the
value of material things and how to save/spend/invest wisely? And why is it so
crucial to our kids’ chances of adult success that we do?
WHY FINANCIAL SKILLS ARE IMPORTANT
“Financial literacy is the foundation to a successful and prosperous life,”
explains Darren Eising, senior financial planner at Elemental Wealth
Management (elementalwealth.com.au). “Just as with reading and writing, kids
need to acquire a solid understanding of the fundamentals of finance,
economics and investment in order to do well in life.”
“Financial literacy is defined as the ability to make informed judgements and to
make effective decisions regarding the use and management of money
(Coben, Dawes & Lee 2005),” adds leading educator Nadia McCallum who was
recently awarded The Director General’s Award for Excellence in Service to
Public Education and Training. “Given we live in a society where money
provides a means to a home, health care, education and food, understanding
how to manage money so that those needs are met is paramount.”
“From earning money, to spending money, to borrowing to investing, and even
to leaving a legacy, financial understanding is crucial,” adds ‘Australia’s Money
Guru’ Michelle House. “It is important kids understand the difference between
needs and wants, and the consequences of poor money management.”
WHY LEARNING YOUNG IS BENEFICIAL
“Children who learn about sound money management when they’re young
have the opportunity to build habits – like saving and investing – that will stand
them in good stead throughout their lives,” explains Lacey Filipich, founder and
director of Money School, a financial education program for families
(moneyschool.org.au). “These habits, if learned early, become second nature.
As children move into adulthood, they then don’t stress about money as much
because they are comfortable with it and have a solid plan about how to
manage it.”
“Financial awareness teaches kids about concepts such as delayed
gratification, fair exchange (the opposite of 'entitlement', a common complaint
of today's parents), value of hard work, and planning ahead,” concurs Dr Ash
Nayate, clinical paediatric neuropsychologist. “The earlier a child can learn
such concepts, the better. Ultimately, they become automatic.”
THE SIGNIFICANCE OF A PARENT’S ROLE
With the education system not focusing too heavily on financial strategy,
responsibility for raising a money­wise child rests almost entirely on parents.

2. “Research shows time and time again that children learn what to place
importance on and to value from what their parents model,” explains Nadia. “If
a child sees a parent picking up a book instead of turning on the television,
they will be more likely to pick up a book. It is the same with money. If parents
talk about money and the reasons for their decisions, children inherently learn
and incorporate these values into their own belief system, and instinctively
begin to make conscious decisions about how to use money.”
From a development point of view, it’s the consistency of our actions over our
words that is key.
“Parents who tell their kids to make smart decisions (and yet themselves do
not), send mixed messages, which can be confusing,” confirms Dr Ash.
“In fact, not involving children at an early age in appropriate discussions and
reasoning around money is the biggest mistake parents can make when
teaching kids about money,” warns Darren. “Parents underestimate their
children’s abilities to grasp economic concepts, and it is these lessons that
become the foundation of their future financial literacy.”
WHAT CHILDREN CAN UNDERSTAND
So, what can kids cerebrally understand about the fiscal opportunities of their
world? Should we be talking NASDAQ to them, or simply keeping the chat
restricted to pocket money terms and conditions?
“From about the ages of three to five, kids start to develop an understanding of
the transactional nature of money (that money is exchanged for goods and
services),” reveals Dr Ash. “The understanding of the actual value of money
however, starts to develop at around the age of seven or so, when kids begin
to appreciate abstract concepts (and money is a very abstract concept!). It is
then that children can work out the difference in money magnitude, e.g. what
can be purchased for $1 versus $2 versus $10. From the age of seven
onwards, kids are then able to grasp such notions as delayed gratification and
fair exchange, and so have a better appreciation for things like earning money
through chores, or putting money in the bank where it can gain interest (i.e.
spend now versus save and spend more later).”
THE MAIN FINANCIAL CONCEPTS
CHILDREN SHOULD KNOW
Okay, we get it! Financial acumen is somewhat of a big deal for our growing
babies. But, what are the main areas that children should be encouraged to
grasp in order to get ahead? Lacey reveals her top five Money School
concepts:
1. Saving
What it is: Putting aside a part of a sum of money earned/received and not
spending it.
Why it’s important: Savings are the seed of the metaphorical money tree.
Without savings, investment cannot occur, and if a setback is experienced (e.g.
an accident or loss of job), there is no buffer.
What age: All ages. This can be done with any gifts your child receives, even
as an infant. Show them what you do to save, then encourage them to do the
same with their pocket money and any income they receive.
How to teach it: Use a bank account or a piggy bank to demonstrate how to
save in real terms.
2. Planning
What it is: Mapping out income and spending. Essentially, this is about
understanding cash flow.
Why it’s important: To have control over one’s finances is an essential skill in
life.
What age: From early primary school.
How to teach it: Include your child in setting and monitoring the family budget.
3. Active Earning
What it is: Trading time and effort for income, whether it’s a wage, a
commission or dividends from an enterprise.
Why it’s important: This teaches delayed gratification and the difference
between wants and needs.
What age: From mid to late primary school.
How to teach it: Start with pocket money as an illustrative example.

3. Encourage your child to undertake chores and activities for money. Set a good
example by actively earning yourself.
4. Investing (for passive earning)
What it is: Buying assets – things that increase in value and provide extra
income.
Why it’s important: Assets generate wealth. This passive income
supplements active income and is a valuable revenue stream. Savings
becomes worth less every year (due to inflation) without investment, and the
sooner kids understand the quicker they can start to develop a wealth mindset.
What age: From late primary school.
How to teach it: The best way to teach this is by doing it and including
children in the process. Paper trading for shares and playing Monopoly are
great ways to demonstrate such skills with low risk. Earning interest on savings
is the bare minimum, so get your child to monitor their interest­bearing savings
account at the very least.
5. Borrowing
What it is: Leveraging other people’s money (usually the bank’s)
to buy bigger assets.
Why it’s important: Debt can be risky, and too many people get their first
introduction to debt via a credit card, which they then use to buy consumer
goods (this is bad debt). Applied wisely however, debt can be used to generate
more growth and passive income than can be achieved with savings alone.
What age: From late primary school.
How to teach it: Give children a loan from the ‘Bank of Mum and Dad’. Ask
them to present their case for their loan (as they would do for a bank), charge
them interest, and repossess items if payments aren’t made.
HOW TO TURN YOUR CHILD INTO A
MONEY MAVEN
Once the concepts have been grasped, the next step is implementing practical
approaches on a regular basis that will help create a financially savvy child in
the long run.
Be consistent
How: Always pay attention to the importance of money, even when talking
about just a few cents. From little things, big things grow…
How this helps: This reinforces consistency and helps build good habits
through example. A child is far more likely to copy your actions than what you
say if the two aren’t aligned.
Talk about it
How: Include children in financial discussions in a helpful way (no need to let
them see you panicking about your mortgage, but instead involve them in
looking for ways to bring costs down, for example).
How this helps: This gives children the opportunity to ask questions and to
seek to understand. When they ask ‘Why?’, tell them, with a clear explanation.
Learn to say “no”
How: Don’t give your kids everything. Say no to buying things, and give them
the opportunity to earn something they really want.
How this helps: Children need to learn about earning and waiting. Giving
them everything they desire does not help them learn that.
Practice negotiation
How: Encourage them to haggle with you!
How this helps: Adults are often scared to negotiate as they don’t want to
seem rude, or they’re afraid they’ll offend someone. You make money on
assets when you buy for less than when you sell. Negotiating the best possible
price is therefore important, even for simply buying a family home. Start young
so kids get comfortable asking for discounts and learning to read people during
negotiations.
Make it fun
How: Play Monopoly or other financial buying/selling games. Adjust the rules if
you like to allow for negotiation and borrowing, interest charges, etc.
How this helps: Games are a great way to teach kids about the importance of
being financially savvy, connecting on their level. Just ensure they can relate
the lessons they learn to real life.
WHAT PARENTS SAY…

4. WHAT PARENTS SAY…
Amelie Drouin, mum To Felix (9), Anais (7) and Mathilda (4)
“We want our children to know the value of money so that they understand it is
important to work hard in life and to not take money for granted. We teach our
kids to save via their school banking accounts and how to shop, by comparing
different items at different prices across stores. We also encourage them to
make money for themselves. We recently let Felix sell some bags of hot chillies
he had grown in the garden (he made about $10 in an hour!). Plus, we help the
children give to the needy by contributing to the Care program at our church
and donating food to St. Vinnie’s. We hope to make them see they are very
lucky to have a roof over their heads and food on the table every day.”
Armand Aguillon, dad To Jewel (15) and Izaac (3)
“It’s so important to raise a financially savvy child, but schools don’t seem to
teach this. If kids aren’t going to learn it in school, they need to learn it from us,
as parents. We believe the single most important thing a child should be taught
about money is to save 10 per cent of their income. Every fortnight, we also
play monopoly and include our three­year­old in the game where he can play
as the banker and hands out the monies. He also enjoys throwing the dice.
Jewel is now at the stage where she knows how to win the game and wins it
constantly.”
Melinda Edwards, mum to Brooklyn (4)
“I believe it’s never too early to start planting the seed of healthy money habits
in a child’s mind. Brooklyn used to ask me for an iPad all the time. I could have
easily bought him one, but instead decided to use the situation as the perfect
introductory lesson towards money: working hard, cultivating a resourceful
mindset and reaching goals. I told him it's the same as anything in life – he can
have whatever his little heart desires if he can figure out a way to earn it. From
there, we worked out the goal amount he needed to purchase the iPad and
brainstormed ways for him to earn the money. I also invested $50. As a result,
he has been making and selling rocky road chocolate in his uncle’s bakery and
has made approximately $130 profit to date.”
For more Family Finance tips download our eguide here.
Written by
Jessica Jane Sammut
Jessica Jane Sammut is a writer, editor and journalist, who
has worked for national media and high profile global
brands for nearly 10 years. A former London commercial
lawyer, Jessica is now living her zen­life in Noosa,
spending her days in the surf and nights on the deck of
her palm­inspired shack with her tribe of boys.