In many homes, the topic of money is a touchy one. It is considered rude – a taboo even – for parents to talk to their children about money. Many parents as a result shy away from addressing the issue of finances in their own homes.

What the parents don’t realise is that this can leave their children drowning in the muddy pond of financial illiteracy. They fail to arm their children with adequate knowledge that will serve a useful purpose once the children leave home.

Talking openly about finances is a great way for teaching kids about money. But money has been branded as the feared monster in the closet and without openly addressing the issue, your kids might as well jump on the bandwagon. It is your role to ensure your kids understand the importance of money, and that money is not bad at all. For if it was, we all wouldn’t need it every other day.

We encourage you to show your children the family budget. Talk to them and let them know how money flows around the household. Let them understand why keeping a budget is as useful as going to work in the first place. With the global recession tearing down economies all over, it is important to make your kids understand why the cost of living is so high.

Talk to them and let them know how much it costs to support them. By doing so, you will instil a sense of responsibility early in their lives. They will grow to be responsible adults as well as understand the real cost of living.

It will also become easier for your kids to adjust to life when they leave home as they will benefit from the confidence brought about by financial literacy.

Teaching kids about money involves doing all these and many other things. Talking openly about money matters at home is the best way to ensure your kids learn as much as is needed.

Looking for more ideas and educational material to teach your kids about money? Visit moneysmart.gov.au for more information.