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How to Teach your kids about Money using Pocket Money – Australian Investment Education

There is often debate among parents as to how to best teach your kids about money. Whether it be pocket money or part time jobs, join us this week as we jump look at what tools we can use to teach our kids about money:

Pocket Money

Regular pocket money for no reason is a common method for parents looking to introduce their kids to money and saving. Other parents may opt to only give their kids money in return for doing chores or even use money as an incentive for goals. Host Andrew Baxter equates regular pocket money for nothing to child welfare in as far as rewarding kids for no effort. The effect it can have is that the relationship to money becomes that if you ask for it it comes and you do not need to work for it. This is problematic because as we all know – money comes to those who earn it. This is not to say that needs should not be met but simply handing out cash may not work to serve kids well into the future.

Household Chores

As mentioned, plenty of parents choose to reward household chores with money as opposed to straight pocket money. General help around the house is great for busy parents and Host Andrew Baxter knows how important it can be to encourage your kids to help out. Building these as general responsibilities when your kids are young may come in handy as they grow older and are equipped to help out with more serious tasks. Keep in mind it is not always ideal to make it seem like a purely transactional process as the willingness to complete tasks may disappear if a financial reward is not on offer each and every time. Overall, chores are a great way to instill a sense of responsibility within kids – while also giving yourself the chance to kick your feet up every now and then. One of the tasks Andrew pays his daughter to do is clean up the paddock in which her horse lives. He has found that after working for her own money and deciding what she wants to spend it on, she has begun making more sensible decisions and really considering how long it took her to earn.

Dealing with Pushback

Host Andrew Baxter knows that with kids you can tend to get pushback in certain circumstances. When it comes to chores, you get this most often when there is a sense of a working relationship instead of encouraging the “helping out” feel for given chores. Ideally, you want to build a sense of responsibility and desire to help out around the house to try to limit the pushback when it comes to chores. Often as well, there are times when kids may be tired or not in the right space to complete the tasks and it can be useful to identify these times and give them a break.

Budgeting for Your Kids

There is no one way to do things when it comes to money so it’s important to find a system which works for you and your family. Host Andrew and his wife have different approaches but both are effective in their own ways. One way they as a team help their kids learn to save and budget is to attach the enjoyment gained by having a given thing to the act of saving. In doing this, you will be working to build good money habits for the future where your kids will work to save what they can as they will link this to their ability to have nice things. As you make them aware of how money really works, you will quickly see how their thought processes change and they may begin to adopt healthy money habits.

Part Time Work

A lot of people are against putting their kids into part time work at an early age, but Host Andrew Baxter is an advocate for part time work for a few reasons. Money aside, part time work can teach kids valuable skills which they will need in the future. The ideas of responsibility and the need to show up on time, as well as various training and learning how a working environment operates are all things that kids would benefit from by having a part time job.

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