From pocket money to share portfolios – teaching kids about investing

Teaching kids about investing doesn’t have to be complicated. When it’s age‑appropriate, fun and engaging, it can help set them up for financial success.

One of the most valuable gifts you can give your children is an early understanding of money.

Learning how to save, budget and invest lays the foundation for lifelong financial confidence. This educational phase can start much earlier than most parents realise, with research from ASIC  indicating that children as young as five have emotional reactions to spending and saving*. This means children can start developing healthy money and investment attitudes from a young age.

Begin with everyday experiences

To help introduce children to money, take advantage of daily activities, such as paying for groceries or tapping a payment card. You can use these opportunities to explain how money works and how spending cuts what is in your bank account. Talk about earning that money through work, and how saving can help you reach small and big goals.

Bills are another teaching opportunity. Show your child an electricity or phone bill so they understand that using power or data costs money. Also encourage them to save toward a small goal, a toy or game for example using a piggy bank (yes, there are piggy bank apps now) or savings account. Watching their balance grow can drive motivation.

Build money skills

As your children grow, give them chances to manage small amounts of money. Pocket money can teach the link between effort and reward. Paying for chores like mowing the lawn or washing the car helps them understand that money is earned, not given.

Hybrid systems are also popular with parents, providing a base weekly amount for a child, plus extra for additional responsibilities. This approach builds budgeting and financial decision-making skills. Get them involved in everyday financial choices, too. Compare prices when shopping online or sit down together to plan a simple family budget. These activities reinforce the importance of trade-offs and value for money.

Introducing investing

The next step is to start introducing the idea of investing. Explain that instead of keeping money in a piggy bank or account, investors buy things like company shares or managed funds, which can grow in value over time.

Make it real

Try to tie investing lessons to your child’s own interests or goals. Teenagers might enjoy exploring how investing could help pay for university, travel, or their first car. The aim is to keep the topic relatable and fun.

Just as important is teaching your child that investments can go down, as well as up. Talk openly about risk, diversification and patience.

^{*Young People and Money, ASIC and MoneySmart.gov.au, December 2021 https://files.moneysmart.gov.au/media/wjmncxvz/young-people-and-money-report.pdf}