Lynda Moore notes that financial education isn't simply about teaching children to save. It's about helping them understand choices, priorities and consequences, and those lessons are best learned through experience

One of the things I enjoy most about working with clients is that conversations about money invariably lead to discussions about family.

Becoming more aware and talking more openly about money has some really interesting flow on effects.

Recently, I met with a client came for a check-in and review of her finances, it didn’t take long before we were talking about her eleven-year-old daughter.

"She gets pocket money every week," she told me. "Within about forty-five minutes it's gone. Every single time. I don't know how to get through to her."   It’s so much easier as a parent to relate to a child who is a mini me money personality, but this mother and daughter were polar opposites, Mum’s a hoarder, and her daughter is a spender.  I explained this to her, and I could see the Aha moment happening. No wonder she couldn’t understand her daughters behaviour, we needed to look at this from a different perspective.

It's a concern I hear from many parents, particularly during the school holidays when children often have more opportunities to spend. It can be frustrating to watch them use all their money so quickly, especially when you've tried to encourage them to save.

The good news is that your child probably isn't doing anything unusual.  Concepts like opportunity cost, and delayed gratification are something they can’t grasp yet, they are still developing the part of the brain responsible for planning ahead, weighing consequences and controlling impulses. The excitement of buying something today often feels much more important than the idea of saving for something bigger later.

Understanding this can change the way we approach teaching children about money.

Rather than asking how to stop them spending, it can be more helpful to ask how we can help them learn from their spending. Financial education isn't simply about teaching children to save. It's about helping them understand choices, priorities and consequences, and those lessons are best learned through experience. This takes patience and time, often things parents are in short supply of, but giving children the opportunity to manage their own money is one of the most valuable financial lessons we can offer.

Whether it's pocket money, birthday money or a small holiday budget, children begin making real financial decisions. They quickly discover that spending money on one thing often means missing out on something else later.

If an eleven-year-old spends all their pocket money on the first day and must wait until next week for more, it can feel disappointing. However, that disappointment often teaches delayed gratification far better than repeated reminders ever could.

As parents, it's natural to want to step in and rescue our children when they're upset. We might buy the extra treat or replace the money they've already spent because we don't like seeing them disappointed, or the temper tantrum in the middle of the supermarket!

I learned this lesson very early on with my daughter, I still recall the day Miss 3yr old and I were in Farmers shopping for new crockery.  The feet were planted, hands on hips, and the chin pushed forward.  Then the arm shot out and she pointed and she said, “I want that one!” Of course ‘that one’ was double the price of the one I was looking at (and could afford at the time), but rather than get into a discussion about quality and price aren’t necessarily the same thing, or dishwasher options, I could see the bottom lip start to quiver, so for the sake of peace, we went home with her choice. I was a single parent at the time, working and raising my daughter, I just didn’t have the energy to turn this experience into a money management lesson. 

While that's understandable, it can also remove an important learning opportunity. Small financial mistakes made during childhood are usually inexpensive lessons, and they help build confidence for bigger financial decisions later in life.

Another thing I encourage parents to think about is their child's natural money personality.

Some children are natural savers. They enjoy watching their money grow and carefully consider every purchase. Others love spending and enjoy the excitement of buying something new. Some are incredibly generous and immediately want to spend money on gifts for friends or family.

None of these personalities are right or wrong, and as with my client, we aren’t guaranteed to have children with the same money personality as us, so it can feel quite strange when our child just doesn’t get a concept that we understand so easily.

The goal isn't to change who your child is. Instead, it's about helping them recognise their own habits and develop healthy behaviours around them.

A child who enjoys spending doesn't need to stop buying things. They simply need to learn how to spend thoughtfully.  A child that doesn’t want to spend their pocket money, needs gentle encouragement that considered spending is OK.

Encouraging them to pause before making a purchase can make a real difference. Asking questions like, "Do I really want this?" or "Will I still be happy with this next week?" helps children think beyond the excitement of the moment.  This of course needs to be done in an age-appropriate way, a five-year-old will respond quite differently to an eleven-year-old.

We've all experienced the excitement that comes with buying something new. Whether it's clothing, technology or something we spotted online, that little burst of happiness is real. The challenge is that the feeling usually fades much faster than the money does.  Helping children recognise this while they're young gives them an important financial advantage.

Many parents struggle with their own money management, and it can be very hard to talk to your children about money and expect them to behave in a way that you aren’t demonstrating yourself.   So why not use the school holidays as an opportunity to practise new skills for the whole family?

Start by having planning session for the holidays, what are the activities that you want to do as a family, are there school holiday programs that need to be planned, or are you going away on a family holiday?

With older children you could set them the task of doing some of the planning and working out the costs.  Or you could give your child a holiday spending budget and explaining that it's theirs to manage for the duration of the holidays.

Some children will spend everything in the first few days, while others will spread it across the holidays. Either way, once it's gone, it's gone. This takes discipline on the part of the parent not to top it up if it does disappear on day one.

Instead of criticising their choices, ask questions. What made them choose that purchase? Was it worth it? Would they make the same decision again? These conversations encourage children to reflect on their spending and begin making more thoughtful decisions in the future.  Let them make mistakes and learn from them, it’s better that it happens when they are younger, than when they have left the nest.

It's also worth remembering that children learn as much from watching us as they do from listening to us.  If they see us planning purchases, saving towards goals and talking openly about financial decisions, they'll begin to understand that managing money is a skill rather than something people simply know how to do.

There is no perfect way to teach children about money, and every child learns differently. What matters most is giving them opportunities to practise while the consequences are still small enough to become valuable lessons rather than expensive mistakes.

*Lynda Moore is a Money Mentalist coach and New Zealand’s only certified New Money Story® mentor. Lynda helps you understand why you do the things you do with your money, when we all know we should spend less than we earn. You can contact her here.