Why you should stop buying things for your kids

Jody Allen is the queen of savings. The mother-of-three at the helm of the Stay At Home Mum (SAHM) empire can feed her fussy family for just $50 a week without even working up a sweat.

Which is why you should take note when she talks about how to teach children to manage money in the real world.

In this episode of Honey Mums, Deb Knight talks to Jody Allen about her pocket money strategy. (Article continues.)

https://omny.fm/shows/9honey-super-mums/dkmumspodcast6/embed

She says when it comes to children, you need to start teaching them about money as young as possible.

"Start with pocket money," she says. "They get to learn how to handle money from a really, really young age."

Allen also says she gives her children a 'finance agreement' whenever they want to make a major purchase, citing an article published on SAHM in which a child asked his mother for a Playstation.

"Rather than just buying it for him for a birthday or Christmas, she made him sign a finance agreement," she explains. "So he got it up front but he had to do all his normal chores that every kid has to do."

But she said beyond that, additional chores came with a dollar value attached and at the end of the week, the amount was tallied up and applied to the finance agreement.

"And the rest of it he could take in cash or pay towards the loan to pay it off quicker."

Allen says a finance agreement teaches them more about how money works in the real world than general pocket money would.

"I think it really teaches them the value of finance, and this is what real life is," she says. "That's our job as parents, to prepare them for the outside world and let's face it: all our kids are going to get finance on cars and houses. It's just a fact of life."

Allen says the agreement will teach them about making repayments and working hard for things.

"I think it's setting a really, really good example for kids when they are young."

It also teaches them to set and meet goals.

"So my children are too little to understand that yet," Allen says. "They still blow all their pocket money on crap."

However she plans to implement finance plans as soon as possible.

Share your money saving tips by sending an email to Jo Abi at jabi@nine.com.au or via Twitter @joabi or Instagram @joabi961