How to teach kids good money habits

The earlier children learn to manage money, the better their chance at setting themselves up financially, says wealth coach Andrew Woodward
Tips on how to help kids set savings goals, celebrate milestones and learn about responsible money management through pocket money
Four ways to weave money conversations into your everyday interactions

Money may not be the be-all and end-all but it does help when it comes to gaining independence and going after things we want in life. Wealth coach Andrew Woodward says the earlier that children learn to manage money, the better their chance at setting themselves up financially.

“Kids start developing money habits between the ages of two and seven so we need to be teaching them good habits when they’re receptive.” The beginning of the school year—with a new teacher, schedule and outlook—is a good time to add a money management plan, too. “Aligning savings goals with the school terms can help kids track their progress more easily,” says Woodward.

Setting savings goals for younger children

A simple way for parents to help their kids develop a savings plan is by setting goals. “Allow them to identify something they want—whether it’s a toy, a game or an experience—and build a savings goal around that,” suggests Woodward.

Tech can also teach kids real-world money skills. Kit, the pocket money app, built by CommBank, makes it fun and interactive, with lessons and challenges designed to help kids develop their money smarts.

“Kit offers earning and saving features with parental controls, along with gamified learning experiences called Money Quests,” says Yish Koh, managing director of Kit. “Kids complete mini-games and quizzes to earn rewards and get nudges that promote real-world behaviours, like setting up smart savings goals.”

Tip: Celebrate savings milestones

Rather than having pocket money as a set-and-forget task, check in with your kids and celebrate when they hit a savings goal with small rewards. For teens with a job, discuss how they’re managing their pay. Some parents bolt on the added motivation of matching saved dollars for loftier goals.

Tools to help teens take control of their money

As kids hit their teens, their wish lists get longer (and more expensive).That once-coveted LEGO set is long forgotten—now they’re eyeing off a new phone and concert tickets.

Woodward says it’s important to let teens enjoy their money but also guide them towards thinking about their financial future. “With teens, it’s about helping them understand the bigger picture—the time it takes to save for things—and finding that balance between enjoying the moment and planning ahead.”

Encourage your teen to get familiar with the tools in the CommBank app to track and manage everyday expenses. As digital natives, teens respond to taking control of their money in a more tech-savvy way, using apps and digital tools that make managing their finances feel interactive. CommBank’s Money Plan tool in the CommBank app enables teens to easily track spending by category like eating out, transport or entertainment. To help them make progress they can also set budgets for each category and savings goals that feel achievable and realistic for their daily lives.

Show some proof their efforts are worth it

When it comes to money, teaching kids to separate funds by intention means not relying on willpower alone to achieve their goals. “This is the core of good money management,” says Woodward, who recommends having different accounts for regular spending and then savings.

Then, show them their efforts are worth it. For younger kids, parents and carers can now connect a new or existing CommBank Youthsaver account to their child’s Kit account, allowing them to see those savings grow over time, with interest. For teens, encourage them to check their savings balance—and the compound interest they’re making on it—in their own Youthsaver account so they can see they’re gradually getting closer to their goals.

How much pocket money should you give kids?

According to a CommBank survey, almost 80 per cent of Australian parents give their kids pocket money¹, generally in exchange for tasks. And there’s a good reason why: pocket money helps kids learn about responsible money management. Whether you’re introducing it or adjusting things as your kids get older, the start of the year is a good time to reset how much you give and the tasks they need to do to earn it.

“You’re teaching kids that money comes from providing value and effort,” says Woodward. There’s no set rule for how much pocket money to give your child—it just needs to fit your budget and help your kids develop financial skills. For younger kids (ages four to nine), a typical amount is about $7 per week. As they get older, adjust the amount based on their needs and let them manage it independently. The average for kids aged 10 to 12 is about $11 and for teens 13 to 15, it’s a little more than $14¹.

Tip: Highlight the value of time

Woodward suggests discussing with your teen how small habits can secure a financial future. “Help them understand that saving takes time—especially for big purchases—but it all starts with baby steps,” he says. And it’s a good idea to reiterate the power of compound interest.

How to talk to kids about money

Teaching kids to save opens the door to broader chats about money. Here’s how to weave it into your everyday interactions:

Use everyday moments

Involve kids in activities like grocery shopping or planning outings to teach them the difference between needs and wants.

Discuss financial independence

Use your child’s savings plan to talk about why it’s important to be financially independent and encourage them to set long-term goals.

Start tackling big ideas

As kids get older, discuss more complex financial topics—like interest, loans and even the basics of investing—to prepare them for financial decisions as young adults.

Be honest about your own journey

Another thing you can share is your relationship with money, the skills you now have that you wish you’d acquired sooner and what you’re still working on—let them see that we’re always learning.