Time to read : 5 Minutes
I have this conversation with my daughter – often – at the shops:
Me: “Are you sure you want to buy that [insert name of shiny/tempting thing]? I’m not sure you need it.”
Her: “Yes, it’s my favourite [thing] on the planet.”
Me: “Well, you didn’t want it until you saw it two minutes ago. And if you get it, you’ll have no money left.
“Think of ‘Future You’.”
Her: “I hate ‘Future Me’ – she takes all the fun away from ‘NOW Me’.”
Yes, Miss 11 is a work in personal-finance progress.
And like most adults-in-training, she doesn’t love me telling her what to do.
So, these are the five ways I instead show her, and her 14 year old brother, how to be money smart – by stealth.
I recommend them for your kids too.
💲 Tactic 1: issue the pocket money challenge
At the beginning of every new school year, when we’re getting our lives scheduled and sorted again, I give my kids a basic choice: receive your pocket money weekly or monthly. I offer them $10 a week or four times that amount, $40 a month (yes I realise that monthly figure versus the weekly one is slightly underpaying, but it’s to keep it simple). In the beginning, they’d always opt for the larger amount… it’s enticing for a child. The strong possibility is that they will also spend it in the first week and have nothing left for the subsequent three. As did mine.
The lesson is (somewhat painfully) learned if you don’t then give them more – you need to be strong!
My kids both quickly decided that weekly was best: it’s easier to make money last.
By the way, they need to work for their pocket money – doing chores – like in the real world, we all do.
Stealth money lesson: money is earned and not bestowed. Also, it’s finite and it needs to be eked out.
💲 Tactic 2: set a grocery ‘mission’
Seriously, you’ve never seen a kid get more considered and careful with spending than with this exercise.
What I do is give my children, say, $20 and send them into the supermarket on their own (now that they’re older) to buy the items on a shopping list.
The trick is to first up the enthusiasm – and sneaky financial education – with these powerful five words: “You can keep the change.”
My little girl can now fashion a feast at the supermarket for about $8… thus pocketing $12… for shiny/tempting things!
She sources the bargains, using unit pricing to identify what we call the fake sales, and makes substitutions for better value… and gets money smarter with every visit.
Stealth money lesson: careful budgeting carries big personal benefits.
💲 Tactic 3: use cash to warn about ‘de-coupling’
My daughter said this the other day: “When I spend money from my pocket money card, Mamma, I don’t really care. When I spend car washing cash [her main source of extra earnings], I really think about it.”
What she neatly described is the money-decision-biasing phenomenon of ‘coupling’.
When you pay with cash, you directly connect the purchase with the payment pain.
When you use a card, especially a credit card or delay-pay service like Buy Now Pay Later, you break that psychological connection… ‘de-coupling’.
And it’s well-documented that the lower ‘discomfort’ makes most people spend more.
I also combine using physical and virtual money with my kids. I put notes and coins they’ve earned in their hands… and they swiftly give them back to me and ask that I put the money on their card (easier, of course, to spend online).
No matter. I think that token ‘transaction’ is important.
And be sure to talk, talk, talk about what’s happening when you flash the ‘magic’ plastic, because to a small person it can seem like a modern-day fairytale – they don’t see the evil bill at the end.
Stealth money lesson: just because you often don’t see money anymore, it still runs out. You need to be really careful what you do with it.
💲 Tactic 4: walk the talk
As parents, it is life changing for your children if you model great money behaviour.
There is no lecture here but children see everything… and they could well emulate it.
This is particularly true if money – or more likely the lack of it – is a real trigger point for you.
Just like eco-anxiety, economic anxiety is high among children right now.
Yes, kids need to be kept somewhat in the loop of what is happening financially to your family, it’s good training, but not to the extent it distresses them. Many adults have confided in me that formative experiences mean money decisions trigger them, making smart decisions more difficult.
Stealth money lesson: money can be emotional… to be a successful money manager, you might have to consciously override not just some hard-wired spending weaknesses but maybe, your upbringing too.
Which brings me to…
💲 Tactic 5: convey the power… and the possibilities
If you don’t always do it, I’m sure you know that if you diligently allocate money, it can take you to beautiful places.
But we all need strong motivation to resist instant gratification… and that’s where teaching your mini me’s to have goals will be a game changer.
Make wall charts with their progress towards rewards so sweet they can almost taste them. Or use kid-tastic tech tools (there are some really good ones) to track it.
A salient representation facilitates resisting temptation.
If the tools and the tech hit dopamine high notes – that buzz we all get from things going well – that can turn financial successes into a lifelong positive habit.
Stealth money lesson: if you’re smart with your precious financial resources, and don’t waste it on the shiny/tempting stuff, you can enjoy far shinier things!
Bottom line
So now that I’ve shared my ‘two cents’ worth’, it’s over to you. Which of these tactics will you start using straight away to teach your children to be money-smart?
Stealth money lessons may take some time to get down pat, but they’re priceless for helping shape healthier attitudes to money in the years to come.
Go deeper:
Why it’s important to teach kids about money – even in a cashless society
Do you ask these 5 questions to make better money decisions?
