Start giving kids financial advice at young age, BusinessDesk's Frances Cook says

An expert believes parents should choose to give their children financial advice over a "nest egg" to help set them up for a strong future with money. 

BusinessDesk investments editor Frances Cook joined AM on Tuesday morning to reveal her top tips for parents about how to help their kids get ahead.   

She told the show it's more important for parents to give kids strong financial advice throughout their childhood rather than handing them a hefty payout.  

"We all know the world is getting more and more expensive, that it's hard to do things like buy a house, so a lot of people will really scrimp, save, go without trying to build up a nest egg for their kids," she told AM co-host Melissa Chan-Green.  

"The problem with that approach is if you have your kid turn 18 and this lump sum of money just arrives on them, even if you've raised a really good kid that triggers something in us, our brains just don't handle it very well and most people will blow it."  

Cook said it's "surprisingly young" at what age parents should start giving financial advice. So what age does she recommend? 

She told AM about one family who started giving their children, who were three years old, pocket money, which raised a few eyebrows with their family members. 

"It actually transformed their kid's relationship with money," she said. "They started working together. They suddenly realised, if I get $2 a week and that toy is $20, that's a lot and would save up for things.  

"They went to one of those little outdoor festivals that you get in various towns and the kids both wanted a hot dog, but the hot dog was $4, and they thought that's too much and then they worked together to pool their money and split the hot dog, which is just fantastic." 

Cook said while there is nothing wrong with parents giving their kids a "nest egg" to get them started, she believes families should have strategies in place to make sure they don't "blow it".   

For younger kids, Cook recommends parents take them to the bank to deposit coins or notes so they can feel involved and start to understand about money.  

For older kids in their teens, she suggests parents offer advice about investing.  

"You might say, here's your investing account that I'm building up for you to use for whatever your goal is in the future, what would you like to invest in together? These are the decisions I've made for you so far. Would you like to pick a new one? 

"Then they can sort of start to see how investments work, how it goes up and down and not be so scared by it. They're both getting some ownership of that money, they feel like they've contributed to it and like it's theirs but they're also learning by doing, which is huge," Cook said.

But Cook said if she had to choose between "knowledge and that feeling of comfort" with money or a nest egg should we choose giving financial advice. 

"But of course, if you can do both that's amazing."

Watch the full interview above.