Talk Money With Your Kids During The Holiday Season

Financial literacy is the ability to use knowledge and skills to make effective and informed money management decisions. While literacy – the ability to read and write – is a
03 Dec 2016 11:00
Talk Money With Your Kids During The Holiday Season

Financial literacy is the ability to use knowledge and skills to make effective and informed money management decisions.

While literacy – the ability to read and write – is a fundamental part of the education system, financial literacy is often left out of the equation.

Fortunately in Fiji we have different groups speaking out and spreading the gospel of financial education even to the interiors of Fiji.

Earlier this year, Reserve Bank of Fiji Governor Barry Whiteside went to speak to around 300 students of Namosi Secondary School.

This was done through their initiative called student diary, the theme this year being – Money talks, I should bank or invest.

It highlights to students the different things that they can do with the money that they may earn.

“In this time and age it is very important for us to know how to manage our money wisely,” Mr Whiteside said.

While there is a movement to include more finance-related coursework in the education system as well as through government initiatives, parents and guardians are the primary educators.

This includes teaching children the skills they need to develop a strong foundation for life-long financial competence.

Many adults, however, avoid talking to kids about money, because they lack confidence in how they’ve handled their own finances.

This is unfortunate, because adults have two things that children do not have when it comes to finances: experience and perspective.

You do not have to be a financial prodigy with a perfect track record to teach your child personal finance basics and get the money conversation started.

By teaching your children about money, you help them discover the relationships between earning, spending and saving.

In doing this, children also begin to understand the value of money.

At a young age most kids comprehend that money can be exchanged for something they need and want.

What they might not understand is what exactly money is and how it ends up in your wallet.

Explain to them that most adults get a job so they can earn money, called income.

Explain what your job is and how you are paid (you do not need to give money details).

Explain that your family uses the money to buy the things we need and some of the things we want. We also save some money each week so we can use it later”.

Once kids understand that people have to earn money, they might be interested in learning how they, too, can earn money – right now and in the future.

Not surprisingly, most children have a lot more respect for their own money than they have for yours.

In other words, that toy gun might be something they have to have if it’s your money – but they might be able to live without it if it involves their money.

Even if kids are expected to contribute a small amount of money towards a purchase, they may be able to decide they don’t really need the item.

Depending on your financial situation, a weekly allowance can be an excellent tool to help kids learn money management skills.

This allowance can include their bus fares and lunch money if they don’t bring food from home.

Since kids have little opportunity to “earn” money, an allowance provides the money they need to practice saving and making good spending choices.

How much money you think your child really needs and can manage is entirely at your discretion.

Part of making good spending choices is being aware of the difference between needs and wants.

Explaining to your child the relationship between needs and wants is an important concept for children to understand.

Needs are things that we must have in order to survive – things we truly can’t be without.

Wants, on the other hand, are things that we would like to have, but that are not necessary for survival.

Since we usually have more wants than we can afford, we have to make choices and decide what we really want the most.


Kids can learn at an early age that:

  • Money is limited.
  • People have to make spending choices.

Another practical approach is to operate from home like a bank with piggy bank as the account.

They deposit money into that account and you explain to them that like a bank you will give an interest rate for each month they have money in their piggy bank.

While the interest rate may not do much to encourage kids to save, most kids will nevertheless like the idea that their money can earn more money (even if it is just a few cents).

Younger children may not understand the math behind interest or the idea of compounding just yet. But they are old enough to appreciate the fact that their money can earn a little bit of interest.

Be sure to discuss the different ways that your child can earn money to deposit in his or her piggy bank account.

For young kids, this usually includes allowances and gifts (such as birthday money).

Kids might also be able to do odd jobs around the house and yard or at a neighbour’s or relative’s house (with supervision) to earn a little money.

Finally, entrepreneurial endeavours example cupcake sales – can help little ones learn valuable skills while earning some extra cash.



A study from the Teachers Annuity Association of America (TIAA-CREF Institute) in 2011, shows that people who are less financially literate tend to accumulate less wealth.

They also borrow more, pay more in financial product fees and are less likely to invest or know the terms of their mortgages or other loans.

People with a high degree of financial literacy, on the other hand, are more likely to make plans for retirement.

And those who do plan for retirement have more than twice the wealth of people who do not plan.



Money is an exciting topic for kids, and many are eager to learn about earning, spending and saving money, even at a very young age.

Most young children are ready to learn the basic concepts – what money is, difference between needs and wants, spending choices and saving.

Keep in mind, however, that much of this learning is the result of repetition, experience and practice.

The more you are able to take advantage of teachable moments the easier it will be for your child to grow up to be a financially responsibly individual.

The holidays are around the corner! Sit down and have chat with your kids.

This is an informative publication, sponsored by The Fiji Sun, Fiji Bureau of Statistics and HFC Bank. All views expressed or implied are purely of the Treasurer at the HFC Bank, Peter Fuata.


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