Before they leave home, teach your kids these nine things about money

3. How to earn money: Kids from a very young age can get a real sense of satisfaction from earning money for doing chores. While some jobs should be just part of their daily routine, taking on extra responsibility could be an opportunity to reward them with a few dollars.

Establishing a small business as a family is a great way to give their efforts some momentum. My kids have their own beehives and sell the honey over the summer months. We also make lip balm using the beeswax, which we supply to a few shops. All sales are set aside into a future fund, which they can’t access until they are older.

Aside from that, my son has a lawnmowing business, while my daughter has a pet sitting business, earning her money to check in on cats, dogs and chooks in the local area. Our neighbours love being able to leave their dog in the backyard while they’re away, and some payments have been as high as $110, which is pretty decent for a 12-year-old.

Consider helping your child set up a business making soap, selling homegrown produce to local stores or cafes, making gift cards or busking. Just make sure you have the correct permits in place.

4. Banking and borrowing: Knowing how banks work is an essential life skill. Kids of all ages can gain an understanding of financial transactions, bank accounts and fees in a few conversations.

As they grow, explain the difference between fixed and variable rates, the risks of getting into debt, how credit cards work and how to earn interest.

5. Delayed gratification: The buy now pay later movement has made it difficult to resist temptations to buy that shiny new thing. So start early to teach your kids about delaying purchases until they have saved up.

A good way to do this is to make sure that they understand that some trips to the supermarket are just for the basics, and that every trip to the shops won’t result in a treat. By learning to wait and save up for something they want, kids understand that saving up for that car or house deposit takes time.

6. How investing works: Explaining that investing has the potential to generate income over time as a wealth generation tool is a critical life skill. Open their understanding to how financial markets work, which will demystify the process of investing and make it feel more accessible to them.

Start by teaching the basics of risk and reward, and profit and loss. Explain that the value of stocks can rise and fall and that you can’t always predict the external factors that impact its value.

Of course, if you own stocks, explain why you chose to invest in those companies, and talk through the concepts of trading shares.

7. Superannuation: When your teen starts work, they will need to understand how superannuation works and whether they are eligible for the super guarantee.

Take some time to help them set up a super fund and explain how they can keep track of their super if they change jobs. Help them keep an eye on their balance to ensure there is growth and that their employer is doing the right thing by them.

Show your teen how superannuation can grow, and how much they need by retirement. This road map gives their career journey some purpose as they start their working life.

8. Scams: Take some time to explain the sophistication and prevalence of scams, so your child isn’t fooled by offers of unexpected winnings, fake charities, buying or selling or inheritance scams, which are always doing the rounds.

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Explain how they can protect themselves from scams, such as never sending money to an unknown party and never sharing personal information online.

Also teach them the signs of a hoax email, such as incorrect spelling, what phishing scams look like and where to go if they think they have been scammed.

9. Tax: The ATO points out that educating kids about tax should be a shared responsibility between both parents and schools. So set aside some time to explain how and why we are taxed.

Our tax system might be complex, but keep it simple by explaining that tax is a way for the government to get money to cover the costs of building roads can help kids understand why we pay tax.

Use some real life examples, and also access the free Tax, Super + You resource by the Tax Office, which helps students understand how tax works when entering the workforce.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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