While children are earning and saving money much earlier than their parents did, the virtualisation of money is making it harder for children to learn its value, according to a Commonwealth Bank survey of 1,000 parents1.
According to the survey, the average child is earning and saving money almost three years younger2 than their parents did, at an average of six and a half3 years of age. However, two thirds (66 per cent) of parents say the increasingly virtual nature of money is making it harder for children to understand its value.
Advances in technology are also influencing money lessons, with 62 per cent of parents admitting technology is changing the way they teach their children about money. Additionally, while the majority (78 per cent) of parents claim that the internet has impacted how children learn about money, 64 per cent agree the basic fundamentals of learning about money remain the same as when they grew up.
Some of the most popular ways parents help their children learn about money include giving them a money box (65 per cent), opening a bank account (50 per cent) and giving them responsibility for a purchase (49 per cent).
Lyn McGrath, Executive General Manager Retail Sales, Commonwealth Bank, says advances in technology and the virtualisation of money mean children need more hands-on experience managing their own ‘real’ money.
“Many children are used to seeing their parents pay for things with a plastic card or click of a mouse, making it much easier to think of money as an infinite resource that is always available.
“Whether children participate in School Banking to open a bank account or keep cash in a money box, children need more hands-on experience to not only help them understand where money comes from, but also provide them with lifelong money management skills,” said Ms McGrath.
Earning and saving
Interestingly, the Commonwealth Bank survey found that many children like to earn additional money, with nearly one in three (32 per cent) children aged 4-12 years earning extra income through entrepreneurial activities including household jobs (72 per cent), working for friends and family (28 per cent) and selling things to friends and relatives (15 per cent). These activities are earning children more than $150 each year, or $111.4m nationwide4.
Pocket money remains most children’s regular source of income, with 69 per cent receiving pocket money, on average getting $7.275 per week. This is significantly higher than when their parents were younger, when only 36 per cent received pocket money, receiving an average of $4.726 per week.
Children today are also prolific savers with 75 per cent saving money to make a purchase. Furthermore, parents believe their children saved more than one third (40 per cent) of the money they received in the past 12 months.
With the majority of respondents saying parents (96 per cent) and teachers (88 per cent) are the most important influence on a child’s money management skills, Commonwealth Bank is encouraging all parents to make learning about money more engaging.
"Our School Banking program is a great starting point. It’s not about the amount of money children save, it’s about fostering good money habits and using rewards to teach children about the benefits of saving and establishing good money sense early on. Other practical ways to teach children at home include playing games, providing rewards for household jobs and translating money into practical everyday scenarios they can understand. The key is to make it fun and relevant," said Ms McGrath.
To find out more about how Commonwealth Bank supports teaching children about money visit: www.commbank.com.au/schoolbanking.
1 The survey was conducted among 1,001 Australians aged 18 years and over and who are a parent of a child/children of primary school age.
2 According to the survey, children are saving money almost three years earlier than their parents, with the average child starting to save at 6.4 years versus 9.1 years when their parents first started saving.
3 According to the survey, parents say on average their children first started to save money at 6.4 years of age.
4 Based on Lonergan Research data and ABS population estimates, the national figure is calculated by multiplying the average amount earned by children who do entrepreneurial activities ($153.63) by the population of Australian children who earn money through entrepreneurial activities (729,639).
5 According to the survey, of the 69 per cent of children that receive pocket money their parents give them on average $7.27 per week.
6 According to the survey, of the 36 per cent of respondents who received pocket money when they were younger, on average they received $4.72 per week.
Notes to editors: