Teaching Kids About Money: Making Pocket Money Count

Sometimes, talking to kids about money can leave them feeling confused, overwhelmed, and, well, quite frankly, quite bored. But here’s the thing: pocket money is one of the best tools to teach your kids the financial skills they’ll need to thrive. With a little creativity (and a lot of patience), you can make learning about money fun, practical, and literally life-changing!

1. Turn Pocket Money into a Mini Budgeting Lesson

Handing over $10 a week with no strings attached? Missed opportunity! Instead, show your kids how to manage that money as they would in the real world. Give them $10 but then charge them back:

• $1 for “tax”—because life, sadly, is not tax-free.
• $1 for “utilities”—a nod to real-world bills.
• $3 for “rent/home expenses”—because everyone needs a roof.
• That leaves $5, which they split 50/50: $2.50 for savings/investments and $2.50 for fun spending (toys, treats, whatever their heart desires).

This system is more than cute; it teaches budgeting basics, delayed gratification, and planning ahead.

2. Make Money Talk a Regular Thing

Remember when money was a hush-hush topic? Yeah, let’s leave that in the past. Talking openly about money helps kids understand it’s not some mysterious adult thing—it’s a tool they’ll use every day. Try this:

• Bring them into the budget. Share how much the weekly grocery shop costs and why you choose one brand over another. Go one step further and bring them to do the shopping, give them a budget and ask them to do the shopping and budgeting as your adding to the cart.
• Talk about earnings. Share (in age-appropriate terms) what you earn and how you decide where it goes.
• Make it a game. Challenge them to guess how much certain items cost or how much they can save by choosing the cheaper option.

Dr. Elizabeth Kilbey, a child psychologist, says even kids as young as three can grasp simple money concepts. So start early and keep it fun—you’re not lecturing, you’re storytelling.

3. Pay for Extra Effort, Not Everyday Chores

No, they don’t get paid for making their bed (nice try). Instead, pay for extras that teach them the value of effort. Think washing the car, mowing the lawn, or even reading a book and sharing what they learned.
Once they’ve earned some cash, divide it:

• 50% into a clear piggy bank. There’s something magical about seeing money physically pile up.
• 50% into an investment account. Apps like Spaceship Voyager or Raiz Kids make it easy for kids to start investing, even with tiny amounts. Watching their money grow (hello, compound interest!) will give them a buzz that rivals buying a new toy.
• For younger kids, a savings chart on the fridge can be just as effective. Let them color it in as their savings grow—instant dopamine hit!

4. Teach the Art of Patience

Ever seen those marshmallow experiment videos? The kids who wait for the second marshmallow often grow up to be more successful. Delayed gratification is a superpower, and you can teach it with money.

The key? Make the wait worthwhile. Seeing their patience pay off in a big way will stick with them so Set savings goals. Maybe it’s a new bike or a game. Once they hit their goal, consider matching their savings to reward their patience. Say you’ll double whatever they have managed to save by a certain date.

5. Invest in Their Passions

Does your child love tech? Gaming? Fashion? Show them how they can own a piece of what they love. If they’re into tech, teach them about buying shares in companies like Apple or Google. Does your child obsess over the latest runners? Let them research brands like Nike and learn what it means to be a shareholder.
Investing doesn’t have to be boring. Frame it as a way to own a tiny slice of their favorite things. Plus, it’s a great way to teach them about risk, reward, and the importance of making informed decisions.

6. Teach Them to Give Back

Money isn’t just about spending and saving; it’s also about helping others. Encourage your kids to put a portion of their pocket money toward a cause they care about. Maybe it’s donating to a local shelter or buying supplies for an animal rescue. Knowing their money can make a difference is a lesson in empathy that’s worth its weight in gold.

7. Make It Fun and Interactive

Money lessons don’t have to feel like homework and it doesn’t always have to include REAL cash. Play board games like Monopoly or The Game of Life to teach money management. Use apps like Spriggy, which let kids manage their money digitally (with parental oversight, of course). Create a family challenge: Who can save the most by the end of the month? The more engaging it is, the more likely they’ll stick with it.

8. Discuss the Value of Needs vs. Wants

Helping kids differentiate between needs and wants is crucial. Use everyday scenarios to spark conversations:

• At the grocery store: “Do we need this snack, or is it something we want?”
  When they’re saving: “Are you saving for something you need, or is it something fun?”
• Encourage them to ask themselves, “Will I still want this Stanley cup in a week?” This simple habit builds thoughtful spending.

9. Introduce the Concept of Opportunity Cost

Opportunity cost is a fancy term for “when you choose one thing, you give up something else.” Teach your kids this by asking questions like:

• “If you spend your money on that PlayStation game now, will you be able to go to the cinema with your friends next week?”
• “If you save your weekly lollies money, what could you save up to afford next month?”

This concept helps them weigh their options and think strategically about their money.

Look, none of us were born financial geniuses but the good news is, it’s never too late to help your kids build a solid financial foundation. You don’t have to do it perfectly—just start somewhere.

Keep it simple, make it consistent, and above all, make it fun. Your kids’ future selves will thank you when they’re thriving in adulthood, armed with the financial smarts you gave them.

Kids are like little sponges, soaking up everything you do—watching what you do not what you say. If you’re preaching about saving while swiping your card like it’s a magic wand, they’ll notice  – so make sure you are walking the walk too!