Finance conversations are a good way to teach children financial habits that could stay with them for life. Not only does financial literacy teach children about the importance of saving and how to save, but it could also help them avoid tough lessons later on when it comes to overspending or having too much debt. Help set your children up with healthy finance habits. Here are three easy ways to talk to your kids about money.

1. Paying bills and expenses

Open conversations about paying bills and expenses can help children understand the importance of budgeting and living within their means. So the next time you’re paying bills, talk about things like the electricity and phone bill, the cost of groceries, and how much of your income goes to rent or mortgage repayments.

If you use a credit card, explain how credit works, why you use a credit card, and the things that could possibly go wrong, such as overspending or having too much credit card debt. When grocery shopping, discuss how you compare prices, brands and quantities, and how to look out for special offers or discounts that save money.

Explaining your spending decisions may help your children make more informed choices later on.

2. The value of the dollar

Another important lesson is understanding how money is earned, as most children struggle to comprehend that money isn’t infinite. Start with the basics by helping children recognize different coins and notes while explaining which are worth more than others. Get them to count and sort money to become familiar with it.

Set up a savings account with regular deposits to teach them how to save. And instead of buying them things impulsively, let children have a small amount of their own to spend as they choose – it might make them think twice about spending their own money! As they get older, earning pocket money by doing household chores or working at a part time job are other ways to help children understand the value of the dollar.

By teaching children how to spend wisely and save regularly you’re helping them build good, lifelong financial habits.

3. Setting savings goals

“Instant gratification” is something we’ve come to expect. From being online 24/7, to shopping at any time, to same-day delivery services; so much in our lives is designed to make it easy for us to get what we want right now. So when it comes to having to save for something we want – perhaps a bigger, more expensive item like a car or a house - most of us struggle to get it right.

Teaching children how to set savings goals, regularly save, and forgo other things, forces them to think before they spend impulsively. Whether their savings goal is a new bike or a first car, the principle remains the same: help them understand that buying something immediately often means paying more, or losing out on something more valuable later on.

Encourage children to save and teach them how investing their savings helps grow their money further.

Teaching financial literacy

As parents, you are in the best position to help shape your children’s financial future. By teaching good savings and spending habits, you’re helping develop a healthy relationship with money. You don’t need to be an expert to talk to your children about finances: start with conversations around everyday scenarios: grocery shopping, paying bills, going to work. It’s never too soon to start talking to your children about money. 

To ensure your finances are in good health, book a financial review with a Mortgage Express branded mortgage adviser. They can help you determine you have the right mortgage and help with financial planning around buying a first home, downsizing or upsizing, or preparing for retirement. Get in touch today to find out how a Mortgage Express branded mortgage adviser can help you.