How to teach your kids to be smart with money

Financial literacy is an important life skill that, until recently, hasn’t been a part of our school curriculum in New Zealand. Many adults are experiencing stress and a lack of knowledge when it comes to money as a result of this, so it’s important that we break the cycle with our own children.

From teaching our children the importance of saving money to showing them how to avoid bad debt, there are plenty of ways we can boost the financial literacy of the next generation. Here are just a few helpful tips to get you started when teaching your children how to be smart with money.

1. Give them hands-on experience

If you’ve ever ‘played shops’ with some plastic fruits and vegetables and toy money, then you know that this kind of play is extremely helpful for children. It introduces the concept of using money to pay for items in a fun and interesting way and is a great first step for younger children in particular.

As your kids grow, you can start to introduce them to everyday financial situations by giving them a chance to be involved in a real-life grocery shopping experience. You could give them a calculator and ask them to add everything up as you go, or you could put them in charge of finding the cheapest price on an item you need.

2. Give them the opportunity to earn

Although there have been some conflicting opinions on the distribution of pocket money to children, this can be a fantastic way for them to really understand the value of money. It’s important that children learn that money doesn’t appear out of thin air and that if they don’t have enough money for something they want now, they can save up to get it later.

To help your children really get involved, you could use visual aids such as jars or a graph that show them their goal and how close they are to reaching it each time they add money to their piggy bank. 

3. Discuss the concept of debt

This one might be more for the older children, but it’s never too late to start talking about the importance of understanding what is ‘good debt’ (mortgages, student loans, etc.) and what is ‘bad debt’ (high-interest credit cards). Explain to your kids how credit cards work and why a debit card might be a better option to avoid getting into debt.

If you have debts, don’t hide them from your children. Instead, explain your situation to them in a way that keeps any guilt or shame out of the equation; it’s simply a tool to show them the different kinds of debt. 

4. Watch your words

As we all probably know, it’s easy to pick up negative habits and thoughts about money when we’ve grown up hearing and seeing them. To help your children have a healthier relationship with money, try to be aware of your wording when it comes to talking about money. 

Instead of saying, ‘We can’t afford that’, try to say something like, ‘We’re choosing not to spend money on that’, or, ‘We’re choosing to save for XYZ instead.’ Altering how you talk about money will have a significant impact on your child’s relationship with it and will help to reduce any shame or guilt that can lead to poor financial decisions.

5. Set up a KiwiSaver account early

Even if they won’t be working for a good number of years yet, it’s a good idea to set up a KiwiSaver account for your children and discuss how it works with them. You (or even they) can contribute to it regularly so they can have a good head start for the future.

Although they won’t be eligible for government contributions and they won’t have employee contributions, if you have KiwiSaver, you can show them how it works. Many providers use helpful graphs to show your progress, and these are a powerful tool to use when explaining the benefits of KiwiSaver to your children.


If you want to set a good example for your children and get aspects of your own financial situation under control, come and chat with us about getting your KiwiSaver set up right. We can also help you make sure that your family is covered with the right insurance while we’re at it, so you can move forward knowing everything is under control.


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