In Episode five of Mind Over Money with Nigel Latta, we asked the question that makes almost every parent break out in a cold sweat: how do we best teach our kids about money?

Talking about money is necessary, but not always easy. A lot of kids might end up seeing money come and go but have no idea how – no wonder they think it’s flown in on fairy-power.

Nigel’s classroom experiment showed that kids have complicated and not always pleasant feelings about money – not such a good place to start their lifelong relationship with it. And now that money is often represented by a plastic card or numbers on a screen, parents need to work harder to make money real for their kids.

Here are some tips on how to teach your kids about money:

Talk about money as you use it – both the good and bad stuff.

If you’re at the shops or doing your banking online, explain to your kids what’s happening and why. It’s ok if they don’t get the full picture straight away – just ongoing exposure to money on a day-to-day basis is helpful. And when you’re talking to other grownups about money around your kids, remember to talk about when things are good as well as bad (us adults can be particularly fond of only talking about money when there’s a problem with it).

Guide them through a budget

Teach them to break down their money into pots of spending, saving and giving, so they learn to prioritise and manage their money. Use a notebook or something that they can see all the time, such as a note on the fridge or a blackboard. Engage them with the numbers on the board on a regular basis, as well as with dollars and notes – this helps them connect the numbers written down to the physical money that comes and goes.

Help them establish a saving system

Get them to put aside money for something real and concrete so they see saving not as a loss but as ‘spending for later’ on what they really want. Use the same tricks you might use on yourself – cut out a picture of the savings goal and revisit it regularly. When your child wants to spend the money rather than keep on saving for the original goal, look at the picture and ask them: do you want this new thing more than your big goal?

Kiwibank has an account called First Saver that’s designed to help kids understand the value of money and see how it can compound and grow. You can even set up with Goal Tracker, so your kids have a fun and visual way of tracking their progress.

Explain borrowing

Draw them a simple picture of your own mortgage to show how it works, and other loans that you might have. Teach them that your family has financial obligations to meet, even for things that you might already have. 

Play money games

Play games like Monopoly or real-world games like this one: Show them the power bill and explain how it works. Challenge the family to make next month’s bill lower by turning off lights and unplugging devices, etc. Maybe split the difference with them so they can add to their savings.

Talk to your kids’ school about what they’re doing

Money skills can be weaved into pretty much every other subject, and some schools are amazing at making sure that kids get to grips with money in a fun way. Our mates at Banqer have an amazing product that more and more Kiwi schools are picking up on – maybe your kids’ school could be next?

Starting early is key. Begin your money conversations today – use everyday examples and make chatting about money a natural part of your kid’s life. Teaching kids not to always expect money from others is a valuable lesson to learn. If they can cater for their own needs and wants you’ve done a good job. What could be more satisfying than seeing your children grow into happy, financially confident adults?

See Nigel explain Take the experiment