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Three steps to turn your child into a smart spender

Helping your child become a confident spender is all about instilling some core principles that they can apply to any situation. Teaching them these general money lessons at an early age will mean you don’t have to guide them through every spending choice they make, and they’ll become a savvy spender in no time.

Here are three money principles to instill in your children so they learn to spend responsibly. These are lessons you can start teaching them as soon as they’re old enough to get pocket money.

A key money lesson to teach your child early on is that impulse purchases can often lead to unwise choices. Help your child understand that thinking carefully before they buy will ultimately mean they get more of the things they actually value. For example, if your child loves spending their pocket money on lollies but really wants a computer game, sit them down and work out how many packets of lollies they would need to forego to save enough money to buy the game. You can download our activity sheet to help them learn more about saving for items.  

A simple but important spending principle to understand is that similar products can come in a range of prices. If an item is more expensive, your child may assume that means it’s better. It’s important to explain to them why the prices vary, and that sometimes it can actually be more sensible to go with the cheaper option. For example your child might be drawn to a particular brand, but if you show them that cheaper ‘no name’ brands achieve a similar result and leave them with money in their pocket, you may help them become a savvy spender.  

Sometimes, the best lessons in life are learnt the hard way. If your child has a penchant for spending on unnecessary things, maybe it’s best to let them do so, with some careful supervision. If you allow them to spend their pocket money how they want and they spend it all too quickly or on the wrong things, you’ll have a real life example of the consequences of poor spending decisions.  Be sure to chat them through what they did wrong while giving them practical advice on ways they can save money and spend wisely next time.

 For more tips about money and kids, head to The Beanstalk.

Things to know before you Can: This advice has been prepared without considering your objectives, financial situation or needs. Because of that, you should, before acting on the advice, consider its appropriateness to your circumstances. Terms and conditions for transaction and savings accounts mentioned are available here (PDF 660KB). Please read our Financial Services Guide (PDF 60KB).

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