FAQ about kids and money
Answers to frequently asked questions from parents
1. "Top money lesson to teach kids?" (Click to expand)
Teach your kids to save each time they receive money
The first rule of wealth is 'Spend less than you earn'.
Many adults are suffering from financial stress as they don't follow this rule. The reason they don't follow this rule is because they were never trained as they were growing up
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We need to train our kids to follow this rule from a young age.
Action: Encourage your kids to save at least 10% of all the money they receive for the long-term. This forms a savings habit.
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This is important as it's the money habits that our kids form that determine their future financial wellbeing.
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Learn more about the 3 Rules of Wealth here
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2. "How to teach kids to save?"
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Think of money like seeds
The easiest way is to get your kids to think of money like seeds. They can give their seeds away (spend) or they can plant them (save). If they plant their seeds, those seeds will grow into trees which will produce more seeds. If they continue to plant, they will have their own forest. Their goal should be to save and grow their own financial forest.
This visualization helps them see money growing into the future (rather than just being used to spend now). Also, kids know that it takes time for a tree to grow and hence they learn to be patient with their money.
Teaching your kids to be patient with money is a superpower which will lead them to become financially healthy as they grow up.
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3. "What age should I start giving pocket money?"
As young as 4 years old!
kids will form many of their money habits by the age of 7, so starting young helps them form good money habits.
To help them form great money habits they need some money. This is why it's so important to give kids pocket money (if you can afford to do so).
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Find out all the great benefits of pocket money here
4. "Should I tell my kids about their savings?"
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Yes! #SaveAndTell
If you are saving money for your kids, you should tell them about this money as they grow up.
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Why?
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Helps them witness the power of saving over a long period of time.
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They are more likely to look after this money as they've seen it grow (otherwise they'll feel like a lottery winner at 18)
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They can start planning on how to use tis money effectively (hopefully keeping some of it in savings / investments).
5. "How to I teach my kids to budget?"
A budget is a like a moat around your savings!
Budgeting is so important as it helps kids learn to delay their gratification.
Start by getting them to budget their time. For example, you can limit them to a certain amount of screen time per day or week. They can decide when to use that but once it’s been used it’s gone. Whilst it can be hard for you when they reach their limit, it’s super important that you stick to it otherwise they learn that there is no downside to not budgeting.
Next is to get them to save up for something they want. If you give them pocket money (allowance), then they should set a goal and this will help them budget how much they can spend now versus save towards this goal.
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Find out more about teaching your kids about budgeting here
6. "Should I open a savings account for my kids?"
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Yes! But an investment account is better.
A savings account will allow them to see their money grow as they save.
If your kids are young (under 12 years old), then you should consider setting up an investment account for them. As they have many years before they become adults, this money has plenty of time to grow, even if the stock market falls in the short term.
See our investing FAQ here
7. "What's the quickest way to teach my kids about money?"
Many parents use my online course so they can start money conversations with their kids. Some even watch the course with their kids.
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Thousands of parents have been reading my book Grandpa's Fortune Fables with their kids. It's certainly the most fun way for kids to learn about money.