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Financial Literacy for Your Kids and Teenagers

Financial Literacy - a Must for All Family Members


“What is Money?” and “Where Does Money Come From?” are questions that are often asked by children. Hopefully, you have either been asked these questions or you will be. Our reasoning behind us saying this is simple – being asked gives you an opportunity to start educating your children about money – what it is, where it comes from and most importantly – the real value of money!

You may be asking –

“At what age should kids start learning about money?”

Many commentators suggest that around 5 years old is appropriate. We agree with them! In fact, some parents are so smart, they even start formal training on this topic for their children at around that age. The author can speak from personal experience as he has conducted “Money Workshops” in S.E. Asia for the children of wealthy families. Their ages? Six to 18 years old.

So, teaching kids about money – why does it matter? What do they get out of it; what are the benefits to the rest of the family, the family businesses and to the family dynasty? What’s the best way to start?

Financial Literacy - Image of child putting money into 3 glass jars with caption What is Money? and Where Does Money Come From?

Financial Literacy Teaching - Why It Matters

The relationship between children and their parents is often fraught with misunderstanding.

Adults unfortunately often mistake a lack of years with a lack of intelligence or understanding about things that we take for granted. Too often however, this is completely incorrect. Children are like sponges – they absorb everything around them as they continually discover new things – about life, about people and about themselves. We must recognise this fact and use it to advantage our children’s learning capacity. This is especially true when it comes to money!

If a child learns early in life about money – what it is, where it comes from and its value, then they are way more likely to grow into becoming responsible financial managers. In turn, they are also likely to become valuable family members in managing the family’s business interests and wealth in later life. Let’s face it – isn’t this a far more palatable outcome for the preservation of your family dynasty than having them being the ones who destroy it through uneducated frivolous spending and poor money management?

Children are generally happier when they are recognised for their achievements, be it involving sporting achievements, academic milestones or in fact – any form of mental or physical prowess. We should therefore always encourage them in their learning pursuits, challenge them to be even better at what they do and naturally – groom them to become capable, responsible gatekeepers of the family wealth.

The Best Way to Start on the Basics of Financial Literacy Learning

Pre-Schoolers/Kindergarten Kids

Financial Literacy - The 3 Jar ProcessThe Three Jar Process: Having a piggy bank is fine, however, a visual display of the growing savings is far more effectual.

When setting up the jars, work with him/her/them in determining what the goals are going to be. For instance, the “New Bike” jar might be something else – such as “New iPad”. When they start putting money into the jars, make a big deal about how it’s growing.

Show them that stuff costs money.

Let’s say that you’re taking them to the toy shop because they want to buy a teddy bear that costs say $7.00.  Help them take the money out of the relevant jar then when the purchase is made within the store, have them hand over the money to the cashier. Doing this will result in maximum impact to that child’s thought processes.

Primary School Kids

Teach “opportunity cost”. That’s just another way of saying, “You won’t have the money to buy that pair of sneakers if you buy this video game.” At this age, your kids should be able to weigh decisions and understand the possible outcomes.

Pocket money. Kids should be paid pocket money based on chores they do around the house. Simple things like washing the dishes, taking the rubbish out, mowing the lawn and the like. Don’t just give your kids money for breathing. This concept helps your kids understand that money is earned – it’s not just given to them.

Avoid impulse buying. It’s not uncommon for kids of the age to be influenced into impulse buying by their peers. “Mum – everyone’s got this case for their iPhone. Can I have one pleeeease?” or “Mum, I just found this cute dress. It’s perfect and I love it! Can we buy it please?” Does this sound familiar? This age group really knows how to capitalise on the impulse buy – especially when it comes to using someone else’s money.

Don’t give in. Instead, let your child know they can use their hard-earned pocket money savings to pay for it. However, encourage your child to wait at least a day before they purchase anything over $25. It will likely still be there tomorrow, and they’ll be able to make that money decision with a level head the next day.


Image of quote by Albert Einstein on the magic of compound interestIntroduce them to the magic of compound interest. The earlier your teen can get started investing, the better. Compound interest is a magical thing! Introduce your teen to it at an early age, and they’ll get a head start on preparing for their future.

Get them on a simple budget. Since your teen is likely glued to their mobile device anyway, get them active on this simple budgeting guide – Budgeting. Now is the time to get your teen in the habit of budgeting their income—no matter how small It is. They should learn the importance of making a plan for their money while they’re still under your roof.

Give them the responsibility of a bank account. By the time your kid’s a teenager, you should be able to set them up with a simple bank account if you’ve been doing some of the above along the way. This takes money management to the next level, and will (hopefully) prepare them for managing a much heftier account when they get older.

Teach them the danger of credit cards. As soon as your kid turns 18, they’ll get hounded by credit card offers – especially once they’ve left high school. If you haven’t taught them why this form of debt is a bad idea, they’ll become yet another credit card victim. Remember, it’s up to you to determine the right time for you to teach them these principles.

Help them figure out how to make money. 

When you think about it, teenagers have plenty of free time during the school holidays. If your teen wants some money (and all teens do!), then help them find a job. Better yet, help them to become an entrepreneur! These days, it’s easier than ever for your teen to start up their own business and turn a profit.

A Final Word

As the Author, Phil Manhire, well knows, a really productive way to speed up the financial literacy learning process is invest in a growth-oriented managed fund and/or a suitable stock that can pay healthy dividends (in their name). Doing this provides an ideal means to further their understanding of how investments work, including the power of compound interest. Our duly licensed Senior Adviser, Tony Skinner will be only too happy to have an initial chat with you and/or your children about this.

Finally, please know that we are here to assist ANY of your family members with their financial literacy – not just your kids and teenagers.

How FBA Can Help You With Your Family's Financial Literacy

At Family Business Advisory (FBA), our purpose is to help family businesses succeed on a sustainable basis. As such, we provide you with access to specialist family, business and technical services with a goal being to generate opportunities for families in business.

Our Co-Founder, Phil Manhire, is well-versed and well-experienced in teaching children of all ages from 6-18 years of age, both here in Australia and overseas. This of course is well-backed-up by the investment and wealth management expertise of our other highly-experienced Co-Founder, Tony Skinner. 

In order to complement our own particular specialised skills, over the past several decades, we have also developed a network of trusted, professional advisers in such areas as:

Image of Services spectrum

Moreover, we work at all times to give you peace of mind and proactive support to help navigate any changes in the market brought about by legislative changes, geopolitical events and general market conditions – all to maximise your personal wealth and security.

These services are provided by FBA, in association with the Wealth IQ Group.

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