Key points:
- Start early: Teaching kids about money through age-appropriate concepts like earning, saving, and goal-setting builds lifelong financial habits.
- Empower teens: Introducing budgeting, compound interest, and the risks of debt equips teenagers to make smarter financial decisions.
- Support young adults: Encouraging financial goals, emergency funds, insurance, and estate planning helps young adults navigate independence with confidence.
Money lessons don’t have to wait until kids get their first “real” job. Introducing age-appropriate financial concepts early can help children form healthy habits that compound over time – just like interest on a savings account. Here’s a few tips on how to teach kids and young adults about money which will benefit them financially in the long run.
Young kids
Introduce basic money concepts
Pocket money is a simple way to demonstrate that money is earned through effort. For example, paying $5 for washing the car or mowing the lawn helps kids understand the connection between work and reward. This sets the foundation for valuing money and avoiding entitlement. Kids who grow up understanding that money is earned are more likely to have a strong work ethic and less likely to overspend as adults.
Use visual tools
Clear jars or piggy banks labelled “Save,” “Spend,” and “Give” help kids physically see where their money is going. If they put $2 a week into “Save,” they’ll see their money grow over time. This early exposure to budgeting makes managing larger sums later in life far less intimidating. By the time they’re teenagers and get their first job, they’ll already be comfortable setting money aside instead of spending impulsively.
Encourage goal setting
Setting a savings goal, like $40 for a toy, helps kids learn delayed gratification. You might help them create a savings chart, colouring in a square each time they add money. There are also banking services which allow for a tech-based approach to goal setting and budgeting. Achieving a savings goal provides a sense of pride, teaches them that patience and planning lead to rewards. Kids who master delayed gratification often make better financial choices as adults, such as avoiding unnecessary debt and allowing them to start investing early.
Teenagers
Discuss income and expenses
Create a simple budget with them. If a teenager earns $150 a week and spends $150, they can see how quickly money disappears and why planning matters. Teaching budgeting early helps them avoid “paycheque-to-paycheque” habits later and builds confidence to manage rent, bills, and groceries as they become a young adult.
Explain the benefits of compound interest and investing
Explain compound interest with simple numbers. If they invest $25 a week from age 18 at a 6.5% real return, they could have over $300,000 by retirement in today’s money. Waiting until age 30 drops this to about $150,000. The lesson? Starting small and early pays off significantly. Teens who learn this are more likely to invest early, creating long-term wealth.
| Age | Years invested | Total contribution | Total growth | Estimated value at age 65 |
| 18 | 47 | $61,000 | $343,019 | $404,119 |
| 25 | 40 | $52,000 | $197,149 | $249,149 |
| 30 | 35 | $45,500 | $129,000 | $174,500 |
| 35 | 30 | $39,000 | $81,553 | $120,553 |
| 40 | 20 | $32,500 | $49,067 | $81,567 |
Calculated using: Savings goals calculator – Moneysmart.gov.au
Teach your teen about debt
Show teens real-world examples of how debt grows. Explain that paying only the minimum on a credit card at 20% interest could take years to repay, costing hundreds in interest. Understanding this early can save them thousands over their lifetime, as they’ll be less likely to rack up high-interest debt or misuse “buy now, pay later” services.
Below is an example of how paying the minimum is a poor financial decision.
Impact of choosing to pay the $25 minimum per month when you owe $1,000 on a credit card at 20% interest versus paying extra.
Credit Card Repayment Comparison
| Scenario | Monthly payment | Time to pay off | Total paid | Total interest | Time saved minimum | Interest saved |
| Minimum repayment | $25 | 5 years 7 months (67 months) | $1,661.66 | $661.66 | – | – |
| $50/month repayment | $50 | 2 years 1 months (25 months) | $1,226.61 | $226.61 | 3 years 6 months (42 months) | $435.05 |
| $100/month repayment | $100 | 1 year (12 months) | $1,103.04 | $103.04 | 4 years 7 months (55 months) | $558.62 |
https://moneysmart.gov.au/credit-cards/credit-card-calculator
Talk about the importance of superannuation
Super and retirement most likely feel like an irrelevant concept to someone just starting their working career, however it’s important to take time to explain their payslip and how employer contributions add up over time. Understanding this can motivate them to make sure they consolidate accounts, check fees, and take super seriously early on.
Young adults
Young adulthood comes with exciting opportunities – but also unique financial challenges. Many are balancing HECS-HELP repayments, saving for travel adventures, planning to buy a car, or dreaming of their first home. Managing these competing priorities while learning to earn, save, and invest can feel overwhelming.
Navigating these challenges successfully requires practical money skills, disciplined habits, and a willingness to start small but think big. In this section, we explore actionable strategies to help young adults take control of their finances and make the most of their earning years.
Set financial goals
Encourage your children at this crucial stage to set short- and long-term goals – like saving for a home deposit or a gap year of travel. By defining goals, they’re more likely to create a budget and avoid lifestyle creep. Setting goals early can shave years off big financial milestones, such as buying a house sooner.
Build an emergency fund
Life can be unpredictable. Talk to your children about the benefits of saving 3-6 months of living expenses to help protect against unexpected costs like a job loss, car repairs, or medical bills. An emergency buffer means they can navigate emergencies without relying on high-interest credit cards, saving thousands in interest and stress. It also means they do not have to rely on the bank of “Mum and Dad”!
Understand insurance
Income protection insurance can replace part of your income if you’re unable to work due to illness or injury, while life or disability insurance can help clear debts and provide financial security for your family. Critical illness insurance offers a lump-sum payment if you’re diagnosed with a serious condition such as cancer, heart attack, or stroke – helping cover medical costs and everyday expenses that health insurance may not. Without adequate cover, a single accident or illness could erode years of savings. Insurance isn’t just about protection – it’s about safeguarding your wealth and ensuring long-term financial stability.
Estate Planning
Estate planning is a vital step for young adults, not just their parents. Once you turn 18, parents can no longer make medical or financial decisions on your behalf, so having key documents like an Enduring Power of Attorney and Enduring Guardianship, in addition to a will ensures your wishes are respected and your loved ones are protected. Planning early also helps avoid costly legal complications and provides peace of mind in case of unexpected events.
Seek professional advice
When appropriate, encourage your children to meet with a financial planner to create a tailored plan. Often our clients chose to pay for their children to receive advice from their adviser – which provides parents with peace of mind that their children are in good hands. Professional advice can fast-track wealth building and protect them from costly mistakes.
Teaching our kids about money is more than helping them understand coins and notes – it’s about instilling confidence, discipline, and smart habits that pay off for decades. Whether you’re encouraging your kids to save for a toy or guiding a young adult through their first investment, each lesson compounds over time. Start early, keep it practical, and you’ll give them one of life’s greatest gifts: financial freedom.
