by David Rootsey
Branch Manager, Commonwealth Bank Port Douglas

It is never too early to learn about the value of money and how to budget and save. The earlier you can teach a child about saving versus spending, the better prepared they will be to manage their own money, now and in the future.

Here are some top tips for teaching your kids about money.

One: Help your child learn the difference between needs, wants and wishes. This will help prepare them for making good spending decisions in the future.

Two: As soon as your child can count confidently, introduce them to the concept of money and how we count coins and notes. Take an active role in providing them with information. Observation and repetition are two important ways kids learn.

Three: Consider giving your child pocket money as it is a good way to teach them about the value of money. You could reward them for jobs they do, giving them responsibility around the house and creating opportunities for them to earn additional money by doing extra tasks.  HINT: When you are paying pocket money, consider giving a combination of notes and coins. This helps to familiarise kids with different denominations and can assist in teaching them how to allocate money.  It is also wise to encourage them to divide portions of their money for both spending and saving.

Four: Help your child learn the value of saving by opening a savings account. Encourage your child to deposit a portion of their pocket money into their account.

Five: Make a wish list and set goals. If there’s something your child really wants, sit down with them to work out exactly how much it is going to cost, followed by what they need to do to buy it – a savings plan. HINT: Sometimes it helps to make the savings journey visual for children.  For example, stick a picture of their desired item in their room so they can visualise their goal.

Six: Set a good example and save money in front of your child.  Keep your own moneybox or deposit money in the bank when you are with your child. By showing them you understand the value of saving, you’ll pass on practical real life lessons to your child.

Seven: Remember that kids need to understand where money comes from. When you withdraw money from an ATM, explain to your child that it is your money coming out of your bank account and how you earned the money.  It’s important that they know there isn’t a limitless supply!

Eight: Learning at school. Financial literacy is an important part of our children’s life skills. Talk to your child’s school about how they teach financial literacy in the classroom. The Commonwealth Bank offers two such programs to schools around Australia including the Commonwealth Bank Foundation StartSmart Workshops and Commonwealth Bank School Banking.

StartSmart workshops have been developed by the Commonwealth Bank Foundation to help improve the financial literacy of young people.  Available to both primary and high school students, the interactive and engaging workshops offer a fun approach to developing saving, spending, earning and money management skills.

Commonwealth Bank’s School Banking program encourages primary school children to learn how to save and manage their money, with children making regular deposits to their account while they are at school.

In 2011 there is a further improved Rewards Program that encourages kids to save regularly. What’s more, participating schools receive commission from School Banking deposits and new accounts – helping them to raise additional funds for school initiatives.

Participation in both of these Commonwealth Bank programs is free to all schools across Australia and are part of Commonwealth Bank’s onemillionkids commitment – to educate more than one million Australian school children in financial literacy by 2015.

Good spending and saving habits do not just happen – they are learned. By taking the time to teach your kids how to save money from a very young age, you are laying the foundations of a valuable life skill.