Pocket Money

Mum Amanda Formby is about to teach someone a lesson. "Often you don't see a lot of money these days - it's just the card and they see Mum paying for things on the card and it's just this magic card that you swipe it and you get things - so I really like for them to be able to handle money. And obviously he'll see a ten-dollar note or get to use a five-dollar note and so on - but then he's actually seen me hand over notes at the hairdresser and he's like 'Oh - how much are you spending on hair' - so sometimes it can backfire (LAUGHS).

But by giving the kids some cash, Amanda's spot on the money - it teaches responsibility and forces decisions. Just make sure it's not money for nothing.

"We have a rewards chart - they're able to identify what chores they want to do around the house. Kids love pocket money - so I think it's a great way to start."

Robert Bihar's a financial analyst who's written a book on kids and cash after making an interesting observation: those running big budgets at the top end of town make some basic mistakes which can be traced back to childhood. "Some of the common mistakes parents make - is that they give their kids pocket money - but they don't teach them what to do with that pocket money."

Robert's kids have three money pots: one for spending, one for saving - and one for giving. "For example - my daughter wanted to help babies or children that are sick - so we identified Ronald McDonald House - as something where she could see her money being donated and us seeing the benefit. I'd start by giving your kids a weekly amount that's equal to their age - this makes it a fun and easy way for the kids to remember.

Here are some other ideas: take them supermarket shopping and get them comparing prices; if they want to spend their allowance all at once let them go right ahead - they'll soon see the importance of saving; for teens, pay monthly so they're forced to make their money last; and let them watch you manage YOUR money, whether in-branch or online.

"If you continue to give your kids pocket money on a regular basis - and talk to your kids about money every week - then the learning is there - and it's great fun."