SCHOOLS have been stepped up their focus on financial literacy but children’s money lessons still need to start at home.
New research has found that people who received financial advice from their parents while growing up are more confident managing cash, 30 per cent more likely to set money goals, and 70 per cent better at making financial ends meet.
People who did not receive parental money advice are almost twice as likely to feel overwhelmed by financial matters and 60 per cent more likely to think they are poor money managers, the research by personal loan company Fair Go Finance also found.
The Australian Securities and Investments Commission has been embedding financial literacy in schools, with 8000 teachers already trained in its MoneySmart program and a target to train 24,000 within a few years, but Fair Go Finance managing director Paul Walshe says parents cannot rely solely on the education system.
“Far too often we see kids leave school, get a credit card and a car loan, and before they know it they want a mortgage and they are impeded by these other debts,” he says.
“Parents play a critical role in establishing early financial habits.”
Walshe suggests parents help children set savings goals for something tangible, such as a new toy, app or visit to a fun park. “That’s a more meaningful objective than a number in a bank account.”
The home is still the foremost place children learn their financial literacy skills, says ipac financial adviser Petra Churcher.
“Ideally the lessons between home and school should complement each other,” she says.
“A child’s attitude towards money is learnt from their parents. The challenge may be that the parents have a limited understanding of financial literacy themselves, so who will teach them?”
Melissa Brauer, 43, uses a points-based system to help teach her nine-year-old son Dylan lessons about the value of money.
“We’ve had this system going on for a few years now because of all the things kids say they have to have, for example footy cards at $3 a packet,’’ she says.
“As Dylan has got older and able to help around the house he has specific chores he has to do.
“We work on a points system which we tally up at the end of the week, every point is worth about 15 cents and then we pay him at the end of the week.”
Chores Dylan completes including feeding the family’s cat, hanging out the washing and taking the rubbish out.
TIPS FOR TEACHING KIDS
Set up an incentive system where children are paid for doing chores, rather than just handing them money.
● Teach them the difference between a need and a want.
● Open a savings account for them and take them to the bank to deposit and withdraw.
● Teach them to read the labels at the supermarket.
● Don’t bail out your child if they overspend.
● Make savings goals something tangible rather than just a dollar figure.
● Match their savings as an added incentive.