Topic 4: The 6 Types of Expenses

This is a topic that really does not fit so well into age brackets. You may find it convenient at an appropriate moment when you’re out and about with your kids to talk about a transaction you just made. If so, take the opportunity!

You might say something like “This was a Type 1 Expense – Do you know what a type 1 expense is? It’s a weekly living expense!” 

Take the opportunity to identify all 6 with them as opportunities present themselves and then start asking your kids to identify expenses.

The real purpose of having them get to know all 6 is not so they can parrot them back to you, but so they get to understand the different characteristics of expenses and the need to allocate money for each type by saving in appropriate separate accounts.

As a parent you can help by:

  • Talking openly with your kids about the expenses that you pay for and identifying them as Type 1 to 6.
  • Setting a good example by allocating money to each of the 6 expense types in your own money planning and letting your kids see what you are doing.
  • Explaining the characteristics of each of the 6 expense types as opportunities present themselves so your kids get to understand them and how to deal with them with ease.
  • Gradually moving responsibility for some of the kids’ expenses you would normally pay for, over to them to manage, and holding their hand as you do so. For example, show them how to set up a Spending Plan to pay for the costs of their senior schooling and associated expenses, and give them the power to manage and pay for those expenses under your guidance.

By the time your kids reach adulthood they should:

  • Be aware of all 6 types of Expenses.
  • Be able to identify the type of expenses they pay for with their income when they start work.
  • Know the importance of putting money away for all 6 types.
  • Be able to look forward and predict their most obvious future expenses, identifying them as Type 1, 2, 3, 4, 5, or 6.
  • Understand the characteristics of each type of expense.
  • Know how to set up savings strategies for each of the 6 types of expenses.
  • Have at least 3 bank accounts in place and ready to go when they start work.

Lower Primary School Years:


Upper Primary School Years:


Lower High School Years:


Upper High School Years:


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