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Raising money-smart kids doesn’t have to wait until they’re older - in fact, the earlier, the better. Teaching children about money isn’t just about pocket money; it’s about preparing them for real-world financial decisions. From digital tools to simple household routines, building good habits early can make a huge difference in their confidence and independence.
Pocket Money Structures That Work
There’s no one-size-fits-all approach to pocket money – and when it comes to raising money-smart kids, the structure you choose can make a big difference. Some families hand over money unconditionally, others tie it to household chores, and many opt for a commission-style system where kids earn more by taking on extra responsibilities.
A popular hybrid model includes a base amount for regular duties (like keeping a bedroom tidy), with the chance to earn more through additional tasks like washing the car or mowing the lawn. This method helps children understand that money is earned – not given – and encourages early entrepreneurial thinking. One client’s son, still under ten, started picking fruit from the backyard and selling it out front entirely on his own initiative. That’s a money-smart kid in the making.
Core Lessons: Saving, Spending, Earning, and Giving
The goal of managing kids and cash isn’t just about earning – it’s about instilling a balanced relationship with money. Four key lessons kept coming up throughout the episode:
Saving: Delayed gratification is essential. Children need to learn that big-ticket items like toys or games should be saved for, not expected instantly.
Spending: It’s okay if they spend everything at once – that experience helps them understand consequences. A few empty pockets build strong financial reflexes later.
Earning: Whether through household tasks or academic performance, kids begin to understand the value of money when it’s linked to effort and outcomes.
Giving: Encouraging generosity – through birthday donations or pre-Christmas toy clearouts – builds empathy and a wider sense of purpose.
These lessons don’t just create good savers or smart spenders. They help shape well-rounded young adults who understand how money fits into their lives and communities.
Learning by Watching: The Power of Example
It’s not just about what you give your kids – it’s about what they see you do. Children absorb a lot through observation, even when you don’t realise it. If you’ve got your own financial systems and structures in place, your children are more likely to develop their own good habits by example.
Open conversations about budgeting, spending, and saving aren’t just educational – they’re empowering. And with financial education in schools only just becoming mandatory in New Zealand, a lot of this learning still begins at home.
Going Digital: The Rise of Child-Friendly Money Apps
With physical cash becoming less common, many parents are turning to digital tools to teach money skills. One example discussed in the podcast is SquareOne – a New Zealand-based app that lets kids manage their own prepaid debit card.
Parents can top it up, assign chores, track spending, and help kids set savings goals – all within the app. While it’s not a full bank account (and doesn’t earn interest), it provides a safe and controlled environment to practise real-life money decisions.
It’s a modern approach to a timeless lesson: teaching kids to spend wisely, save consistently, and understand the value of every dollar.
Key Takeaways
Teaching money skills can start as early as age five – it’s never too soon.
Try different pocket money systems to find what works for your family.
Focus on four core lessons: saving, spending, earning, and giving.
Children learn more from what you do than what you say.
Digital tools like SquareOne can help bring money lessons into the modern world.
Next Steps:
Start building strong financial foundations for your family — speak with a Lighthouse Financial adviser about long-term planning, savings, and investing for your children’s future.
If you’d like to learn more, check out these other episodes below.
For a no obligation discussion to see how we can help you on the path to wealth, please contact us.
Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
