An recent OECD study of 15-year-olds across 18 countries found that Aussie teenagers rank among the highest for financial skills and knowledge. Understanding concepts like how to budget and manage money are important skills that parents can foster in kids from a young age.  “Finance is part of everyday life for many (Australian) 15-year-olds, who are already consumers of financial services, such as bank accounts,” according to the OECD study.

However, there is more to be done to prepare young Australians for the challenges of financial decision-making beyond school. Here are some tips on how to teach your children about saving and spending priorities to help set up good money habits for life.

Hands on learning

As soon as a child can count they can be shown the difference in value between coins and notes and be encouraged to divide up and count denominations.  If kids develop good financial skills and habits from an early age, it will set them in good stead for the financial challenges of adulthood.

Teaching your kids about money matters is critical for their personal development. Showing children the basics such as how to budget, spend and save will establish good money habits for life.

Whenever you use cash at the shops allow them to help hand it over and check for the right change.

Find entertaining ways to teach money habits like age-appropriate books, board games, apps and computer games.

Money choices

When your child has a bit of their own money (pocket money, cash for chores or present money) encourage them to try out different options for what to do with it. Is there a big ticket item they want to start saving for? Do they want to open a bank account and make a deposit? Do they want to spend some now and leave some in the piggybank? How about starting a Donate Jar where they put away money for a good cause.

Allow your child to learn through trial and error and talk to them about the difference between needs, wants and wishes.

Create goals

Once your child realises that it’s not always the best decision to spend money on impulse, they’ll start to want to buy something larger than the amount they have on hand. This is when it’s a good time to teach them about setting a goal and putting money away to work towards it. A fun idea is to create a chart that shows their goal and savings milestones along the way.

Value for money

To show your child how to make the most of the money they have, they need to understand that similar products have different values. Show them how to compare different branded products at the supermarket and how there are cost effective alternatives to everyday decisions: buying a book vs. library borrowing, takeaway food vs. cooking, using hot water vs. using cold water.