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3 crucial money lessons to teach your kid: 'The nastiest four little words a parent can say'

These four words will sabotage your kids financial future.

With the cost of living still remarkably high and cash disappearing fast, there has never been a more challenging time to teach kids about money. Forget coins in a jar. Now, it’s about lines on a chart, in an app or an online account.

So, it’s more important than ever for parents to teach their little ones about the intricacies of smart money management. After all, that make-or-break skill will determine if they’ll ever be in a position to move out.

First off, communication is key. You need to talk (and at least pretend to walk) the money messaging that will set your small ones up for big financial success.

Compilation image of Nicole Pedersen-McKinnon and her kids inset into a stock image of a child counting money
It's more important than ever to teach valuable money lessons to your kids. (Source: Nicole Pedersen-McKinnon/Getty) (Samantha Menzies)

There are three crucial concepts you must get across to your kids by the time they graduate high school.


But first, here are the nastiest four little words you can ever say to them if you want them to be financially savvy with a happy future.

The nastiest four little words you can say

Particularly in tight times, it’s so tempting to live a little beyond your means. Or to sugarcoat the cost pressures for your kids.

Here’s what you should NEVER say: “We can’t afford this, but let’s do it anyway.”

As the main role models for your children, this phrase unravels the three most important lessons you can teach them.

3 crucial money lessons you must teach your kids

Lesson 1: Money is finite

No matter how hard you work, you never have unlimited money. You need to work with what you have.

Crucially, your money-in and money-out equation has to balance – or be skewed to the ‘money-in’ side. As has been a truism for so long: you need to spend less than you earn. The alternative is debt because that’s the only way to fund spending more than you earn (other than asking your parents for a handout).

Also by Nicole Pedersen-McKinnon:

But explain well that, if you resort to debt, you pay more for every tiny thing in your life – that’s interest – and you ultimately run out of the ability to buy anything.

Lesson 2: Get strong motivation to resist instant gratification

Because money is finite, you have to carefully decide what to do with it.

Teach your kids that the best way to do this is to think about what you really want. For kids, this might be their first car (by the way, it’s important they have pain in the game – that they scrimp and save for this, even if you match their savings to help them amass enough).

Whatever they want to save for, they need to practice prioritising – foregoing something now for a far better reward later. In other words, delaying gratification.

The ability to do this is life-changing. It also promotes better health and even aids study and career building.

Lesson 3: Rates, not mates

Not many families understand how vital this is to financial success: forget loyalty to the institutions you knew as a kid – the now-banned Dollarmites is how CBA remains Australia’s largest lender, but it’s by no means the cheapest.

The thing is, you probably need to be with a different financial provider for every product you own.

And reinforcing that to your kids will serve them very well. It’s how they will save and make the most money so that they live their best life.

Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at Follow Nicole on Facebook, Twitter and Instagram.

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