How to teach kids about money & budgeting

In WA, many families with mortgages and young children are facing increasing cost-of-living pressures. As parents, we try to protect our children from the stress of financial challenges. However, a new, more inclusive approach might be called for. Have you ever considered involving your children in your family’s budget planning? 

While it’s essential not to overburden kids with financial stress, sharing the reality of managing a household budget — in a safe and age-appropriate way — can empower them with valuable skills for the future. Let’s explore it a little more. 

Involving your kids in the family budget 

Like many parents, you may be used to responding to your children's requests with "that’s too expensive”, or “we can’t afford that right now”. 

Financial Advisor Dawn Thomas recently decided to take this conversation further with her 13-year-old son. Together, they did a cashflow course and constructed a new family budget. Through this process, Dawn’s teen learned to differentiate between fixed expenses (loan repayments, insurances, etc.), savings contributions, and discretionary spending (fun money!). He quickly grasped that reducing fixed costs would create more room for discretionary spending, helping make decisions based on importance and priorities. 

Set your kids up for success! Here are the benefits of involving them. 

• Understand the value of money: Children gain a foundational, practical appreciation for the effort required to earn money and the importance of managing it responsibly. 
• Build financial literacy development: Kids learn fundamental concepts like saving, spending, and investing, which helps prepare them for financial independence and lead to better financial habits in adulthood. 
• Build decision-making & problem-solving skills: Help kids understand trade-offs and prioritisation when allocating limited resources. They learn to identify problems, assess available options, and make decisions to balance a budget. 
• Foster teamwork & communication: Discussing financial goals and challenges together enhances family communication and teaches kids to work collaboratively. 
• Set financial goals: Involvement in budgeting encourages them to set and strive toward achievable financial goals, reinforcing discipline, ownership, and patience. 

Balancing financial transparency 

We’re not saying parents should start allocating major budgeting tasks to children, but keeping them completely in the dark can leave them unprepared for managing money in the future. Here are four strategies that worked for many families: 



1. Learn together: Take a cashflow course or read a book about money management together. The Glen James Spending Plan and Moneysmart offer free resources to get started with budgeting and expense tracking. 
2. Reframe financial choices: Being honest about priorities builds trust, even if it may not be what your children want to hear. Instead of saying "We can't afford that," reframe it to "We're choosing to save for XYZ". This language shift helps children see budgeting as an intentional decision rather than a restriction. 
3. Contextualise bills: When adding bills to your budget, explain what each one is for, giving kids a clearer picture of what it takes to run a household. 
4. Share the knowledge: Have older kids explain the budget to their younger siblings. This reinforces their understanding and ensures the whole family is on the same page. 

Do your kids a favour. 

There’s no denying that being open with your kids about finances will benefit them in managing their money. By involving them in the process, you'll create a supportive environment where they can learn valuable budgeting skills while understanding your family’s financial journey (within reason). 

If you’re looking for support in this area, we can put you in touch with an excellent, reputable Perth Financial Advisor. Get in touch to get started.