Parenting is hard enough. You have to feed them (but only the right foods), keep them clean (but some germs are ok), make sure they’re warm (but for god’s sake don’t overheat them), teach them about technology (but don’t give them too much screen time). Holy hell it’s an undertaking. In the process of teaching them to be a decent human with good manners, there’s the money question. How to bring it up with your kids, what ethos to impart on them, and what’s the going rate for the Tooth Fairy. So we quizzed four brave parents on their approach to money.
Meet the parents:
Brendin, Finance guru
Parent of Tia - 2 years old
Gemma, Digital managing editor (currently on maternity leave)
Parent of Owen - 11 months old
Simon, Founder at GROW Super, Partner at Ernst & Young
Parent of Lotte and Will - 4 years old and 18 months respectively.
Kate, Jewellery Design and Sales
Parent of Tahlia and Leo - 8 and 5 years old respectively.
What's the #1 money lesson you learnt as a kid?
BRENDIN: You can spend 10% of your earnings, the rest is savings for big ticket purchases.
GEMMA: I clearly remember learning when 1c and 2c coins were no longer legal tender! I remember getting in big trouble when I scraped together all the loose coins I could find in the house and following the tune of the Mr Whippy van to not only find he wouldn't accept my fistful of redundant coins, but then I was busted for leaving the house by myself without telling anyone!
But seriously, except for occasionally being aware when it was a point of stress for my parents and the odd note that would turn up in a birthday card from my grandparents, I spent very little time thinking about money as a kid.
SIMON: What I learnt was that there is good debt and bad debt. Debt you incur on an appreciating asset (houses for example) is generally good debt. And there is bad debt - credit cards and personal loans, loans on depreciating assets.
KATE: Spend a little, save even more. My parents were big on encouraging good habits from the start. It's ok to spend some of your precious dollars (life is short) but it's even more rewarding when you save some.
What's your money ethos?
BRENDIN: When you spend money, spend it well.
GEMMA: Aim to have enough money to do the things that matter to you, but make sure you've had a good think about what 'matters' actually means.
SIMON: I don't really have a money ethos. I think it is about balance - saving and planning for the future is important, however it is important to enjoy your life, and to the extent some spare cash is available, things like holidays are a great way of enjoying the money you earn.
KATE: I am pretty money-wise on a day to day basis. I remember being in my 20s living in Sydney, working and going out every weekend, footloose fancy-free. Theeeeen I needed root canal treatment. I realised pretty quickly you can’t run your bank account down to the wire each week. Got to have a plan B! It is a lesson that stuck with me to this day. I do have the odd online shopping hiccup though.
Are you a 'Do as I say, not as I do' parent?
BRENDIN: I will teach Tia to make money work for her, rather than her working for money.
GEMMA: I guess that's something I'll have to start thinking about soon! I hope to practice what I preach - you can be smart with money without being obsessed or greedy.
SIMON: I am not - I think I manage a pretty good balance between working and saving. I think it is important for your children to realise that people work very hard for their money, and this is the ethos I would like to instill in them.
KATE: Definitely attempting to show my kids great habits. I often remind them that I work so that we can enjoy all the fun things in life (and the not so fun things like gas bills and school uniforms.) It is hard to convey that in such a cashless society though. I have a love/hate relationship with Paywave. The supermarket run is made easy but then the kids think all you have to do is wave your card when you need to buy something.
How do you plan on educating your child on money, budgeting, savings?
BRENDIN: Tia will get pocket money but she'll need to earn it and also keep a track of her cash flow in a little notebook.
GEMMA: I didn't have much of an education about money as a child (is that obvious yet?!) but I have heard some great approaches from others that I think I'll try at home. For example, offering to match your kid's savings efforts for a big-ticket purchase or maybe offering a lump sum contribution once they hit a certain savings target - that way you're supporting your child whilst rewarding savings efforts. I also think they should be working and generating some of their own income as soon as they're old enough to, and as they get older and learn more, the list of things (especially luxuries/non-necessities) that the bank of mum and dad will cover gets shorter and shorter.
SIMON: I think making them work for it. I think if people understand that money is earned, they are more likely to value it, rather than spend it unnecessarily.
KATE: I try to weave ‘money talk’ into our daily lives and we have a family business so they get a lot of insight there. It is pretty cute, when they 'play shops' I often hear them talking about lay-by terms! When they are old enough, having a part-time job along with volunteering will be a definite must. Working for a wage and working for a cause taught me vital lessons as a surly teenager.
Have you set up anything for your child, and will you create boundaries?
BRENDIN: Not at this stage, we have a mortgage so all available funds are going towards that.
GEMMA: Umm.. should I have? I signed him up for one of those Westpac Bump accounts where they give you $200 for opening up an account in your kid's name, but haven't got around to actually opening the account yet. Basically what's ours is his still, but that might change in a few weeks once he has his first birthday, depending on what his grandparents put in his envelope...
SIMON: I have set up a bank account for the kids, however will probably set up a share portfolio or investment fund for them.
KATE: We have a Dollarmites account for our older daughter and I have suggested a co-contribution scheme. If she initiates doing jobs and getting the banking book ready well before the banking day - I will add some money to her deposit. My son likes to collect coins from other countries and gives all his Aussie ones to his sister…that won’t last long.
Have you updated your will since starting a family?
BRENDIN: No, it's been discussed but haven't made time to execute.
GEMMA: Having a family prompted me to finally write a will!
SIMON: Yes - and by updating it - I mean creating it. Having kids really focuses you financially (they cost so much money).
KATE: I did but only after my parents suggested it. I found the idea morbid initially but I am so glad my husband and I sorted it.
Has you money outlook changed since starting a family?
BRENDIN: No, I still live by the same mentality in regards to money.
GEMMA: It does change when you realise you're wholly responsible for another person - it's one thing to know what you're happy to go without yourself, but you want what's best for your kid. It's also a matter of figuring out what 'best' means - I don't think that's having everything he wants, when he wants it, but I'd like him not to grow up seeing money as a source of stress or conflict.
SIMON: Yes. I plan for the future considerably more now. Also, I work more - the more kids you have, the more you want to work. I don't know why this is - perhaps it is because they cost so much to keep alive.
KATE: After you have seen bills come in for daycare, it’s hard not to adjust your thinking a little! But I have never been an lavish spender on things just for me so when kids came along my thinking wasn’t that rattled.
What are you most concerned about financially for your child?
BRENDIN:I wonder how Tia will ever be able to afford property in Sydney.
GEMMA: I probably spend too much time online reading about things like job losses through automation, wage stagnation, crazy property prices, etc. I definitely think without some smart policy making and planning there will be plenty of challenges for the next generation when it comes to financial security.
SIMON: The amount of government debt they may inherit. There have obviously been a number of recent budget deficits, which create structural issues in terms of government spending and debt. Someone will have to repay this government debt with their income tax, and I would hate to think that excess spending today could mean a worse standard of life for our kids and grandkids than we have been lucky enough to have.
KATE: Will they have enough super because life expectancy will be even greater for their generation.
Are your children old enough to have started chores? Will they be paid for chores?
BRENDIN: No, but when she is old enough she will have her own chores to do. She will receive some pocket money for the chores but it's not about being paid for doing the work but rather the concept of how to manage money.
GEMMA: No, he's not old enough yet. I wasn't paid for chores as a kid, but I do see merit to this approach especially when they're too young to get a job themselves - perhaps a weekly allowance provided they uphold their end of the bargain completing their allocated chores. Although I think the ideal is that they recognise they should be chipping in as part of the family and because it's nice not to live in squalor, not just for financial reward. We'll see how that goes.
SIMON: Our 1 year old can't say his own name yet, so trying to communicate chores to him is difficult. Our 4-year-old has to pick up her toys, however we don't pay her for it yet.
KATE: Like most families there are jobs that need to get done for the household and then there are jobs that can earn you dollars. It is not so much about the pocket money thing, more about making them resilient and easy to live with as a house mate when they are older! Cleaning up after meals, keeping your room in check, packing away your stuff after the activity is done are some of the standard jobs that go with living as a family.
Do you and your partner have the same outlook on money?
BRENDIN: We have a fairly similar outlook on money.
GEMMA: Yes, I think we must have similar outlooks - for example we combined everything fairly early on and it's been a decade now and that's caused minimal conflict which I think is pretty remarkable. It helps that neither of us is more or less of a spendthrift than the other, we're both pretty frugal most of the time whilst also understanding that sometimes you need to splurge. We also discuss any big purchases before we make them.
SIMON: Kind of. We both know we could be better savers and both appreciate we should save more than we do - however we have different vices when it comes to spending money.
KATE: Yes (thankfully) I cannot even imagine being on a different wavelength there. Basically if we have a big purchase we both chat it over otherwise there is no questioning of who spends what. We also have the same bank account - seems like the couples that have money gripes, always have separate accounts!?
What's the going rate for the Tooth Fairy for a tooth these days?
BRENDIN: We haven't had to encounter the tooth fairy yet... but if I had to put a value on a tooth now, I'd say $5.
GEMMA: No more than a gold coin, surely? But in reality it'll probably be whatever we have in our wallet or can dig out from behind the couch at the time.
SIMON: I don't know - my daughter is yet to lose her first tooth. I am thinking a gold coin. Do kids teeth have any resale value???
KATE: A fiver for each of the two front teeth and a goldie for the rest!