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Someone is knocking at your front door. You’re not expecting anyone, so you’re wondering who it could be. As you open the door, you recognise a familiar face. He looks like your seven-year-old son, but the man in front of you must be in his thirties.

He is wearing a stylish blue tie, your son’s favourite colour. A coincidence? As he stands there, you notice a nice watch on his wrist. But it’s his confidence that catches your attention the most. He looks content, happy.

The resemblance to your little one is uncanny, so you wonder if, like Marty McFly in Back to The Future, he has returned to save his family from an adverse destiny.

Finally, he reveals it to you: “Mum, I’m back from 2047. I want to thank you for putting me on the right path.”

Yes, you did well.

Teaching him about money from a young age set him up for success. 

And the best part is that he never felt he was being taught.

The good habits and the money skills you passed on kept him away from the worries and the sleepless nights. Unlike all his friends, who believed that Uni debt, living pay-day to pay-day and postponing the ‘family home dream’ to later (often much later) in life were all inevitable. 

Your son’s life is different. At 32, he is on top of his Uni debt (he knows he shouldn’t fear HECS debt anyway) and he owns his house. He lives there with his wife Megan and little Jacob. Having their finances under control gave them the freedom to fully enjoy the first years of his life.

Your son from the future knows it: leading a healthy financial life is a hot topic for parents like you right now. Since the pandemic, many parents in Australia and all over the world have made money skills one of the top priorities for their kids to master.

The issue is, most of them don't know where to begin.

Your son thinks they should start right here, and find out what helped him to learn about money. 

Photo by Andrew Neel

7 Ways to Teach Your Child About Money (Backed by Science).

1. Take charge of the teaching

If you think your kids will learn about money in school, think again.

A survey found that only 11% of Australians had formal education when it comes to money. 

As a result, many of them have resorted to modern methods such as YouTube to fulfil their financial education needs (maybe you’re one of them if you’re reading this article!)

So it’s important that you take charge of your child’s money skills. And if you’re wondering why it should be you and not the school system… read our next tip.

2. Start Early 

Researchers at Cambridge University found that kids’ money habits are formed by age seven 7, and often last for life.

They have identified two b​asic cognitive processes:

  • Imitation - when children learn by observing

  • Induction - which is a child’s ability to detect patterns in what they experience and use them to construct their knowledge of the world. 

In other words, kids learn by watching and imitating the behaviours of parents and other significant adults.

As the evidence from the study suggests, teaching children money skills per se doesn’t shape or change their behaviours.

Yep, you got it: less talk, more walk.

3. Let them learn by doing 

A study from Amsterdam University in The Netherlands considers ‘Experiential Learning’ a promising method to teach money skills to children and adolescents. 

Give your children small amounts so they get used to managing money, save it and even spend it in ways they shouldn’t. 

Once the money is gone, they’ll realise they have to earn it or wait until they get some more.

4. Simulate real life

The best way for them to master personal finance is… to do it themselves! On a small scale, of course. That’s why they should learn how to create a monthly budget, open a bank account, apply for jobs, etc. 

Make them feel like they’re ready to step up – they will love to play grown-ups.

Are your kids at the age where they can apply for real jobs? Advise them on choosing jobs that could open future career opportunities, even if they are paid less.  

So if your son has an inclination for creative arts, help him get a job in an art studio instead of a fast food restaurant. Does your daughter love animals? The vet down the road might need a hand over the summer period.

5. Get them excited about investing 

Show your child the power of savings by having them set a long-term goal (i.e. the purchase of a video game console). Whenever they feel the impulse to buy meaningless items, remind them to keep their eyes on the prize. 

By the time they reach their goal, they will be familiar with the concept of ‘opportunity cost’: the benefit they could experience by spending their money differently (i.e. saving).

Then take it a step further and show them the magic of compounding interest with specific numbers: 

“If you set aside $100 every year starting at age 14, you’ll have $23,000 by age 65, but if you start at age 35, you’ll only have $7,000 by age 65.”

Yes, that’s right. Saving the same amount can give your child three times the returns if they start much earlier.

6. Reward them 

Assign some rewards for extra chores on top of their usual responsibilities. This will replicate the dynamic they’ll experience in their work-life: Want more? Work more. 

The rewards don’t have to be money, but could also be points they can use towards their long-term goal. Consider it a way to gamify their learning experience.

And remember: money shouldn’t be the end goal. This exercise should teach them to actively contribute to family life.

7. Let them learn through play

Research has shown that gamification can improve children’s learning experience.

According to the American Psychological Association, “Simple games that are easy to access and can be played quickly, can improve players' moods, promote relaxation and ward off anxiety.”

The researchers also believe that, with games, children learn to cope with ongoing failures. This builds emotional resilience they can rely upon in their everyday lives.

The Australian Government’s website, Moneysmart, includes several games and activities your children can do to learn about money. The list is organised by age, which is pretty handy.

And if you’re looking for an app, you will easily find one online. But don’t underestimate the traditional board game Monopoly – we all learnt some key money lessons (and had lots of fun) playing that game.

Photo by BP Miller

Final Words

There you have it, the seven most effective ways to teach money skills to your child according to science… and your son from the future.

By the way, at Life Sherpa we believe that having fun helps people at all ages. 

Over the years, we have seen how keeping things light and simple fast-tracks our customers' learning process and ability to take control of their money.

Plus, who says finance should be boring? Let’s have some funance instead!

10 Reasons Budgets Don’t Work

If your parents didn't teach you about money, this one is for you.

FREE EBOOK: 10 Reasons Budgets Don’t Work

Francesco Solfrini Profile photo

Francesco Solfrini


For 15 years, Francesco has approached communication from various angles: client-side advertising manager, agency account director, freelance photographer and content writer. Working for several global and Australian finance brands (Morningstar, CBA, American Express, uno Home Loans, OFX and InvestSmart) he has learnt to understand how people save, spend, invest and feel about their money. Today, Francesco develops online content that addresses the real needs and aspirations of Australians when it comes to personal finance.

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