How to boost financial literacy for kids at every age

Discover tips on how to talk to kids about money and boost their financial literacy.

1 December 2023

Key points:

  • It’s useful to start talking to kids about the value of money when they show a basic understanding of the concept. This is typically around the age of four.
  • Children under 12 will have an easier time understanding money if they can see it – give them opportunities to hold coins and notes and track their own savings and spending.
  • As they grow, start to include them in conversations about the cost of living and family budget. It’s also good to share with them your own spending habits, savings goals, and even past mistakes.
  • CommBank’s Kit app helps kids track their savings and learn about money through educational gameplay.  

Talking to kids about money – and teaching them how to save and value it – doesn’t always come easy. The good news is that while kids might tune out dry explanations, apps are turning that information into colourful, interactive games and graphs that bring financial literacy to life. Here, Wendy Allott, a learning designer at CommBank’s new pocket money app for kids, Kit, shares ways to help kids become confident and capable money managers.

What are the key things kids need to understand about money?

Start talking about money as soon as your child shows signs of understanding the idea – usually around the age of four. Teach them to recognise coins and notes and different ways of paying for things. Help them understand that money has to be earned – it doesn’t appear out of nowhere – and that once it’s been spent, it’s gone.

How can kids understand the value of money if they don’t have a moneybox?

It’s easier for kids under the age of 12 to understand money when they can see and feel it. But money is becoming invisible – often these days, children don’t put real cash in their moneybox and take it out again. Kit has been designed to make digital spending as visible as possible. Using the app, kids see their balance go up and down and watch the water levels in their savings stack rise and fall as they save or spend.            

When should I start paying my kids pocket money?

That’s different for all families, but the age of five or six is generally a good time. Around that age, children are learning about money in school and they might notice things their friends do or don’t have and mix with children whose families are more or less financially well-off. The more children are exposed to thinking about money, the more comfortable they will eventually become with it.                                        

How can I talk to kids about money pressures and mistakes?

Modelling positive financial behaviour and ensuring that your kids see that behaviour is important. For example, you can make a point of saying, “I really wanted that dress, but I’m going to have to save up for it.” That way, children see that you’re working and saving for something you want. And share money mistakes, too – we all make them.

How should the money conversation evolve as kids grow?

Bring your kids into discussions about the family budget and how much your utility bills, rates and groceries cost. Talk about how you organise your money to cover everything you need to pay for. Don’t leave your children out of these cost-of-living talks – you want to send them out into the world prepared.                 

How important is it for kids to have their own savings goal?

Being able to set and meet goals is tough – you have to know what you want, how to get there, and resist temptations. That’s hard for adults and even harder for kids. For them, meeting their goal isn’t the crucial aspect – it’s goal-setting behaviours and seeing the outcomes of hard work. Saving is a skill that can be learnt – it’s not a personality trait. Don’t tell your child, “You’re just not a saver” or “It’s just the way you are.” Let children know that if they work on saving, they will get better at it.

How can play help teach kids about financial literacy?

It lets kids fail without fear – the experiences are lifelike but the money isn’t real, so kids can experiment without worrying about losing anything. Kit helps kids practise financial concepts with Money Quests, which are games in the app, including a goal-setting one where kids have to buy a house-warming gift for Kit. Another quest focuses on recognising scams – kids work with Kit to find clues in emails and text messages that show they’re from a scammer. Parents even tell us that their kids teach them about spotting scams!

In a YouGov survey commissioned by Kit, 77% of parents said their children were interested in learning about money

How to talk to kids about money every step of the way

If you’re wondering what your kids should already know about money, use this financial literacy framework to help guide your conversations.

4-7 years old

  • Can identify coins and notes and understand that value is not related to coin size
  • Understand money can be exchanged for goods
  • Create ‘mini shops’ to pretend to sell things to others
  • Know that they can put away money to use later

8-10 years old

  • Can delay making impulse purchases
  • Can track and monitor their own earning and spending
  • Can read basic financial documents, such as receipts
  • Can identify income-generating opportunities in everyday life

11-13 years old

  • Know consumer rights and responsibilities (like getting a refund)
  • Can explain how investing and compound interest work to create wealth
  • Can develop and manage a personal budget on their own
  • Feel that saving money will benefit them in the long-term

Start using Kit – The kids pocket money app

  1. Download the Kit app from the App Store or Google Play Store.
  2. Create a Kit account and add up to five child profiles, each with a prepaid card.
  3. Let your kids learn, earn, and save. 

Things you should know

This article was originally published in Brighter magazine

Kit is a brand of CBA New Digital Businesses Pty Ltd ABN 38 633 072 830 trading as HEY KIT. CBA New Digital Businesses Pty Ltd is a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 (CBA). CBA New Digital Businesses Pty Ltd is not an Authorised Deposit-taking Institution for the purposes of the Banking Act 1959 and its obligations do not represent deposits or other liabilities of Commonwealth Bank of Australia or its subsidiaries, and therefore you may be exposed to investment risk including possible delays in repayment and loss of income and principal invested, as relevant. CBA New Digital Businesses Pty Ltd has been appointed as authorised representative (001296799) of Hay Limited (ABN 34 629 037 403 AFSL 515459), who is the issuer of the Kit Account and associated Kit Cards. 

This article provides general information of an educational nature only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as personal financial product advice. The views expressed by contributors are their own and don’t necessarily reflect the views of CBA. As the information has been provided without considering your objectives, financial situation or needs, you should, before acting on this information, consider the relevant Product Disclosure Statement and Terms and Conditions, and whether the product is appropriate to your circumstances. You should also consider whether seeking independent professional legal, tax and financial advice is necessary. Every effort has been taken to ensure the information was correct as at the time of printing but it may be subject to change. No part of the editorial contents may be reproduced or copied in any form without the prior permission and acknowledgement of CBA.

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