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Posted by LLL

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Teaching children about money is an important aspect of their upbringing; understanding how money is earned, saved and spent is a fundamental skill for a child to be able to successfully manage their own funds later in life.

No matter the age, giving children life experience with money is vital and can start at any time. Children often mimic adult behaviour and learn a lot from watching adults transact with money; over the counter, through ATMs, online and in cash. Tiny tots often play shops and handover pretend money without any prompting, whether we realise they’re mimicking our behaviour or not. Tools such as savings accounts, pocket money tracker and online access may be beneficial in educating kids on how to manage their own money.

A parent’s or guardian’s decision to give a child money or not isn’t a black and white decision. If you choose to give your child pocket money it’s important the rules of when and how they’ll receive money is outlined from the beginning. For example, will the child be compensated for individual chores done or would you prefer them to contribute to the family home without a monetary attachment? Define whether their pocket money will be given per task, per week or per month so that expectations are clear from the start.

Family circumstances and values may mean parents and guardians choose not to give money to their children. Children have many opportunities to learn the value of money through play money, learning from their parents in real-life situations and from birthdays, Christmas or other special occasion gifts such as cash or vouchers.

Here are a few ideas to get started.


The age you choose to teach your children about money is up to you. Play-based games such as shops can teach young children about exchanging money for goods. Older children and teenagers can contribute to chores or running the household to learn the value of earning money. Payments could mirror the child’s age, for example, $5 per week for a 5-year-old, depending on what your family budget will allow.

If you don’t have cash readily available, a token system can work equally well. One token could equal $1 for example, and paid to the child when they reach a lump sum such as $10.

Pocket money

Pocket money is often given to a child for contributing to the running of the family home and not for individual tasks or chores. Pocket money is a great way for children to learn the advantages of saving, setting a goal and managing their funds. Having a regular income allows them to anticipate future funds and to set a budget for a goal with guidance.

Task or chore based earning

Earning pocket money by completing chores can teach children the value of money. Set tasks that are achievable by age and also time. With children’s lives busy with extracurricular activities and homework, it’s important that a child has every opportunity to complete these tasks without needing to compromise other activities.

Try and avoid aligning tasks based on gender. All tasks and chores should be fair to all – girls can mow the lawns equally well and boys can wash the dishes.


Set expectations of how their money can be spent. For example, the LLL encourages spending, sharing and saving and having a percentage of the child’s pocket money split into each. This might be 50 percent for them to spend as they like, 15 percent to share with someone less fortunate and 35 percent to save for a future goal. Allowing the child to set a goal will give them motivation to work towards it, starting with small obtainable goals and continuing to build and grow as the child gets older and more competent.

Wise spending

Define what your child can spend their money on. You might not want all their money spent on treats, but spending the money on entertainment, experiences or toys would be acceptable.

Set a payday of the week. Allocating a specific payday will set children up with an expectation about money and teach them about an adults’ pay cycle.

Cash or digital

As a child gets older and has a firmer understanding of what money looks like and the value of dollars vs cents, you might like to set them up with an online savings account. Have a discussion about whether transferring their savings portion to a savings account that could be checked through internet banking or an app might be a way to avoid temptation.

The LLL offers Children’s Savings Accounts with internet banking and app access. For more information about the fee-free account visit www.lll.org.au/child

It’s up to a child’s caregiver to determine whether children are given money or they need to complete a task to receive pocket money. Families value and prioritise money in different ways and how parents would like their children to learn about money also varies. Learning about money is an individual journey and what works for one family may not work in another.

In the next blog, we will cover what lessons children can learn when they manage their own pocket money.

Visit the LLL’s Kids’ Vault webpage for downloadable financial literacy games and activities for primary aged children.

The LLL prides itself on providing savings accounts that are simple to operate, with a great interest rate and no fees or charges. The LLL has a variety of savings accounts: personal and joint accounts; guardian accounts for children; and business accounts, including for self-managed super funds and not-for-profit organisations.

As an Authorised Deposit-taking Institution (ADI), the LLL is regulated under the Banking Act and by APRA.

This advice is general in nature and does not take into account your personal situation, needs or objectives. Please consider the Disclosure Documents to decide if this product is right for you.

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