How to debt proof your children

Posted on: 23 Sep 2019

Childhood is a time of learning and discovery. A lot of our core beliefs and habits are formed during our younger years including the way we think about/handle money and spending. We grew up with the knowledge of our parents earning salaries, paying mortgages, moaning about debts and of course, paying us pocket money. The way we think about and spend our money, is shaped before it’s even something we are conscious of. We went to school and we learned about Shakespeare, Pythagorean theorems and how to work out the square root of things but there was no specific class to teach us about money management until we reach secondary education and by then, our habits and feelings about money have been formed.


We can only pass on information at the level we learned it and if money management is still something you struggle with as an adult and you’re not confident in your own ability to be money-wise, I have compiled some tips for you about how to talk to your kids about money and finances and ways to help teach them healthy financial habits.

To Earn is to Learn

So right out of the gate, our kids need to have their own money in order to appreciate what it means to use it. I am not suggesting that you just give your children money and see what they do with it. Pocket money is a valuable tool in their financial education. It creates a healthy understanding of how money is earned and helps them to understand that through hard work, over a prolonged period, they can save up for things they really want to buy. How much they earn is up to you; whether you pay them on a chore-by-chore basis or pay them a set amount each week in exchange for them completing their weekly jobs, you will be, their first “employer”. If your kids receive monetary gifts from friends or relatives on their birthday or at Christmas, they can be encouraged to put it into their savings rather than spending it immediately or even, negotiate with them about saving a portion of it and spending the remainder; a win/win.

The Lost Art of Delayed Gratification

We live in a culture that promotes instant gratification as the measure of happiness. If you want something, you should buy it and advertising is very seductive and beguiling. With Afterpay now available on just about everything and good old lay-by as a back-up, the buy-now-pay-later mentality allows us to have the gratification without the guilt of spending; a very dangerous path. Talk to your kids about the gratification of working hard (saving) towards something. Work with them to help them achieve their savings goal; that support will be invaluable to the learning process because, let’s be honest, waiting for things is not exactly something kids are particularly good at. Teaching them patience vs reward is an integral step in nurturing healthy spending habits.

Altruism and Generosity

Have a conversation with your kids about their passions. What do they believe in? Where is there a need in their community that could use some financial help? What causes do they think are worth supporting? Teaching kids about generosity of spirit and selfless acts of kindness can be incorporated into their financial education. Accumulating money for the sake of it is not the goal. Using our money wisely and with generosity is a better goal. Teach them that giving to things that they believe in is not a sacrifice but a reward; that being able to support something that they are passionate about brings a whole new level of satisfaction to life.

Be a Good Role Model

If you are going to talk the talk, you need to walk the walk; always remember… monkey see, monkey do. Setting good financial examples for our children is imperative if they are going to learn the value of the money they earn. There are so many ways we can do this including limiting impulse purchases when shopping with our kids, talking about budgeting with them and around them and having your own savings goals that you are working towards. Always have an open dialogue around these things as well. Explain why impulse purchases are not a healthy spending habit to create, talk to them about credit cards and how interest is an unseen “cost” to be accounted for etc There is nothing that gives you more authority than your own lived experience so talk to your kids about your own money situation and things that you have learned as you’ve gotten older.

Get a Job!

OK so maybe don’t yell at them to get a job but encouraging your teenaged children to find after-school work will be a great lesson in financial management. This is the foundation of how they are going to manage their salary from now on in so making sure they know how to utilise their newly earned cash flow is essential. Encouraging them to enjoy the luxury of an independent wage is just as important as showing them how to save it wisely; this is not about being stingy, it’s about being realistic and practical. If your kids are too young to start working for an employer, encourage them to do jobs for neighbours (for cash), babysitting for friends or even, start a little cottage business.

Save it Up

Take your child to the bank and open a saving account with them. I know interest rates are not what they used to be, I get it, but there are still some good little savings accounts out there if you know where to look. Explain to your child what the account is for and how it works. It may seem like it’s a little unnecessary for a young child to have a savings account but one day, that child will be an adult, and this is all about forming good habits. When they grow up, they will probably be juggling multiple accounts, cards and debts so them being familiar with banking and investment is always going to set them up well. We want our kids to be personally invested in their own financial security.

App and Away

There are so many apps available to help you teach your kids to self-manage their money/spending. Whether you use them or not is up to your but a few good ones to look out for are Spriggy, Kids Money, Savings Spree and Pennybox. Check out your app store to learn more about using apps as a tool to teach your kiddos to be money-wise.


Do your kids have their eyes on something they really want? Maybe a toy or a video game? Teach them how to set a goal and save towards it. As adults, we do this all the time so why not encourage our kids to do the same. Talk to your kids about why they need that thing and whether they actually do “need” it or whether they just “want” it. Try to negotiate with them around their goal setting; their goals need to be achievable and realistic and they need to understand that achieving that goal will take patience and perseverance.

The Good, the Bad, the Ugly

This whole financial education journey will not come without setbacks, tantrums and sometimes, downright failure; that is OK, in fact, it’s important that your kids experience both the good and the bad sides of money. Consequences, both good and bad will always teach us so much, so try not to sugarcoat the process too much and keep it realistic. Celebrate their wins with them but always be supportive about their losses too. Loss is a very normal part of savings and investment and learning to manage their expectations is vital in the process.

So, there you have it! Some practical ways to get your kids started on their financial education journey. Remember that consistency is key here and that over time, these lessons will create some really fantastic, healthy attitudes towards money and your kids’ ability to handle their finances like a boss.

This article should not be considered legal advice, but as a general guide only. If you are facing legal recovery action, please consult a legal attorney to assist you. For further information on how to have your debts cut by half or more through a specialist negotiator, reach out to us on [email protected] or contact us on 1300 490 030.