This is Part 2 of How to Teach Your Kids about Money.  Money is such an important aspect of all of our lives, yet, unfortunately being taught how to manage money not taught in most schools.  So, it is up to us, as parents / guardians, to teach our kids about money.  

Let’s recap where we left off from Part 1 of this blog, from our guest blogger, Will Rainey of Blue Tree Savings.

In Part 1, we encouraged you to get your kids to think of money as ’seeds’.

Kids will straight away know that seeds can be planted and grow into something else.  Therefore, when they are given money, they will have to consider whether to give the seeds away (spend) or plant them (save).

The more they can visualise their money, the better chance they have of learning and retaining the message.  For my kids, they get to choose where they plant their money.  They can plant a combination of:

Flowers, which is saving up for something they want to buy in the future, e.g. a new toy.

Bushes, which is their savings account.

Blue Trees, which is the money we invest for them.

They realise that both their Bushes and Blue Trees produce more seeds over time which leads to more Bushes and Blue Trees growing, i.e. learning that money can grow and make more money.

We show them their forest growing over time as they save some of the money they receive.  They love it and ask, “how many Blue Trees do we have now?”  Also, my kids don’t like the thought of cutting down trees, so they naturally become protective of this forest they are growing.

Remember, most young adults today don’t have a single Bush or Blue Tree, let alone a forest.  This shows the advantage you can be giving your kids.

If you’d like to show your kids their money as Flowers, Bushes and Blue Trees, then here is a tool you can use – Habit Maker, you can find it here.

Pocket money is the most underrated financial education tool there is!

One more point before I set out the three essential money habits you should help your kids form.  I strongly recommend that you give your kids some weekly pocket money (if you aren’t already doing so). It doesn’t matter how much you give them, but please make sure it doesn’t impact your financial situation.

The key reason for giving them some pocket money is that it allows them to start making decisions about money.  The more decisions they make, the great the opportunity for them to start forming the three money habits below.

The 3 essential money habits you should help your kids form

Now on to the habits which will change your kids’ financial future for the better.

  1. Get them to save at least 10% of all the money they receive for the long-term

This has a number of benefits.  Firstly, it teaches them to think about saving before they start spending.  So many people say, ‘I’ll save whatever I don’t spend” and then end up spending it all.  This habit will really help them start to build up some savings and then only spending what is left.  Note that they only need to save 10%, that’s still 90% left to spend so won’t make a big difference in terms of being able to buy what they want.

Secondly, this habit is about saving for the long-term.  This money is to help them see that money can make money.  Once they have saved enough, put this money in a savings account, or better still, consider investing this money.

Don’t be put off by the fact that 10% is a small amount.  Even if you give them $2 pocket money, get them to save that 20c.  It’s the habit we want to develop, besides, it will soon add up!

Imagine if you saved 10% of all the money you ever received since you were a child – I know I wish I had!

  1. Get them to save up for something they want

Ask your kids to write down what they want to buy but can’t afford now.  Then get them to save up for it.

This is very simple but super powerful.

We now live in a world where people want everything instantly.  We need to teach our kids to delay their gratification.  Those that learn to delay their gratification are much more likely to overspend and go into debt when they are older.

  1. Get them to look at their money regularly

There is a famous saying, ‘What gets monitored, gets managed’ – this is never truer than when it comes to money!

Get in the habit of showing your kids how much money (or you can change this to Flowers, Bushes and Blue Trees) at least once a month.  This will help them understand that money is important.  They will also start to see that their money is growing (if they are savings).

It also allows them to ask questions and build a positive relationship with money.

Don’t delay, get your kids forming these habits today!

There you have it. You now have the knowledge and actions you need to make a real positive impact on your kids’ financial future.

Get them understanding that money has different uses and help them form these three essential habits.

For parents who would like to help their kids form these three essential habits, and see their financial forest grow, then please check out the Blue Tree Habit Maker.

Meanwhile, if you are struggling to work out your own financial priorities or just have no idea what you are doing with your money and want to make some changes, then come and talk to us.  We help you achieve your financial goals by showing you how to build a money management system that is tailored to your needs and fits with your lifestyle.

When you are ready to talk, we are here to listen and help.  Drop us an email or click on this link to find a day and time that suits you to have a chat with us, we’re really very friendly.  Best of all – it’s free!

Will Rainey: After years providing investment advice to governments, insurance companies and some of the world’s largest pension schemes, Will founded Blue Tree Savings Ltd to help parents teach their kids about money.  Blue Tree provides weekly blogs which help parents learn engaging ways to teach their kids new money topics (visit  Blue Tree also provide workshops for companies and have now released a digital Piggy Bank which allows kids to decide where to put the money they have received and shows them their financial forest growing as they save their money.