Teaching your kids how to save money used to be easy: just give them a piggy bank and one instruction: fill it up.

But as the financial world changes so rapidly that lesson no longer holds.

MyState Bank managing director and chief executive officer Melos Sulicich says the increasingly digital nature of money has a big effect on children.

A better approach, Sulicich argues, is to teach kids from early age how the financial system works, using online tools in particular, which in turn will help instil a shrewder appreciation of money.

“Giving kids a good grounding in sensible money management sets them up for life,” Sulicich says. “It’s never too early to talk to kids about money, and many will start asking questions from a young age about different expenses.

“Encourage this interest and teach them about financial concepts at an appropriate age. That way you’ll give them a firm financial foundation from the outset, one of the best gifts a parent can give their kids.”

Here are Sulicich’s top tips for teaching about kids about money.

Give pocket money digitally

We used to think about money as only being coins and paper, but most transactions are now performed online, which can make money seem unreal to kids.

So, from a very young age, teach children about the value of the different notes and coins so they recognise the basics.

One way to help them understand about money is give kids their pocket money digitally. Open a bank about for them and organise a direct debit each week or month.

Perhaps they’ve forgotten to do their chores. Well, cancelling their next digital pocket money payment will soon get the message across.

And where there are penalties there can also be incentives. Depositing a bonus payment for extra chores is another key way to instil financial acumen, and show your kids online banking at work.

Give kids some context around money

Talking openly and honestly about money is hard. And remember, there’s usually little need to bombard a young child with the financial intricacies of the family’s assets and liabilities.

Understanding the value of money is the key. Without giving away too much personal information, talk openly about how much different jobs pay, what it costs to buy a house or flat and how home loans work.

This can be overwhelming for little kids. Teach smaller children about how much everyday household items cost, the value of shopping around for a better price and, for the really little ones, how to recognise numbers.

Teach kids about share markets

Most Australians with superannuation funds are invested in the share market, and it’s important to help kids understand from a young age how their investments work.

The Australian Securities Exchange has a great online share game kids can use to learn about how investment markets work. It teaches them about how to buy and sell shares and that what goes up may come down.

More from Morningstar

• Earth Day 2018: ESG a powerful force for businesses, investors

• Royal Commission emphasis on CBA, Westpac, AMP wealth not fatal

 Make better investment decisions with Morningstar Premium | Free 4-week trial

Melos Sulicich is the managing director and chief executive officer MyState Bank.

© 2018 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This information is to be used for personal, non-commercial purposes only. No reproduction is permitted without the prior written consent of Morningstar. Any general advice or 'class service' have been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), or its Authorised Representatives, and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. Please refer to our Financial Services Guide (FSG) for more information at www.morningstar.com.au/s/fsg.pdf. Our publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Past performance does not necessarily indicate a financial product's future performance. To obtain advice tailored to your situation, contact a licensed financial adviser. Some material is copyright and published under licence from ASX Operations Pty Ltd ACN 004 523 782 ("ASXO"). The article is current as at date of publication.