Over a cup of tea with some friends, the topic of money came up and, as usual, everyone had an opinion. They ranged from “I keep tight control on my money, so I don’t really have an issue”, to “No matter how hard I try to manage my money and how frugal I am, I still can’t seem to make it to the next pay day without borrowing”.

This really got me thinking about how our parents help us form money habits. It always fascinates me that how each generation somehow holds the generation before or after them as responsible for their money issues. Here are my thoughts on what money really means to kids of different ages.

Ages 0 to 5

• Money doesn’t really mean much. All their needs are met by their parents, so they have no worries.

• They can ‘demand’ what they want, and parents should be careful about raising expectations. They may regret it in later years when their children have difficulty separating needs from wants.

• This is a great age to start introducing them to the concept that money doesn’t grow on trees. Somebody has to work hard to earn money.

• If parents give their children pocket money, this is a great opportunity to start them thinking about saving some for tomorrow. The sooner they start to learn this, the better they’ll manage their money in later years.

Ages 6 to 12

• By this age, your child will think they own the world. They think mum and dad will pay for anything they want.

• Their demands increase and comparisons with friends start. If they can have it, why can’t we?

• They see money as something mum and dad get from a machine. If this is the case, maybe it’s time for parents to sit back, reflect and ask themselves some serious questions like: Are you preparing your child well for the complex world that lies ahead? Do they really know and understand how hard their parents work to pay for all things a family needs and wants?

• Do they know what real money looks like? If not, it’s time to move money from an abstract idea to a tangible thing they can hold, so they can see it used in different contexts.

• Be honest with them. If you don’t have enough money to buy something your child asked for, explain. They need to know that sometimes we have to go without things we want. Our first priority is to make sure their needs are met.

Ages 13-17

• Try telling kids of this challenging age that, as a parent, you’re responsible for their needs, but you’re not obliged to pay for all their wants. Explain that you’re happy to work with them to save for the things they want.

• Things are still black and white to them. They can comprehend facts a lot faster, especially if it concerns them.

• Most children will have access to some money by this age: pocket money from parents, or part-time jobs to earn money.

• Some parents don’t want to ‘burden’ their children with money worries. There’s no right or wrong way to do this. However, one thing does help – children at this age need to have a general idea about your household income and spending, even if they don’t know the details.

• Involve them in setting the household budget. It’s a great exercise that can start conversations about money. Talk about how much money you should spend on each item, set priorities, identify needs and wants, and aim for a small surplus in your budget.

• Encourage your children to open an ‘education or training account’. This will help reduce the amount they need to borrow in future.

Ages 18+

• At 18-plus, kids are adults and take on adult responsibilities, including debt. Their biggest debt now may be a student loan, if they have one. Many parents contribute something towards the expenses of their children’s education.

• Have some serious money conversations. Talk about why they want to study. Are they just broadening their horizons and getting life experience, or are they boosting their chances of getting a job? If it’s the former, maybe they’d like to earn some money first and study later. If it’s the latter, encourage them to do their research. Help them analyse the job market, and their options.

• Our research shows that at this age young people still go to their parents first for financial advice. Make it your business to keep yourself well informed, to help guide them. If you can’t help them, find out who can.

• Encourage them to enrol in KiwiSaver as soon as they start earning money.

• Remember, it is a huge transition for them to move from a sheltered environment where everything was provided, to taking responsibility for their own affairs. Even if they don’t ask for help, they can always do with some advice.

• Help them set short-term to long-term goals and work with them on an action plan.

• If you can help them visualise their goals and the pathway to achieve them, it will make it more real for them.

Published 26 May 2019

This article does not contain any financial advice and has not taken into account any particular person’s circumstances. Before relying on it, we recommend you speak with a financial adviser. This story reflects the views of the contributor only. Content comes from sources that we consider are accurate, but we do not guarantee that the content is accurate.