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Money and kids in a digital world

Reading, writing, maths – we all know how vital it is to teach children these basic skills, but what about financial literacy?

In today’s increasingly cashless society, many transactions are conducted using cards or online. Teaching our children about the value of money and how to manage it isn’t quite as simple as popping pennies into piggy banks or playing with Monopoly money, so how do we do it?

That question has been playing on the government’s mind, and in August this year it culminated in the launch of the MoneySmart Teaching Primary professional learning package. Developed by the Australian Securities and Investments Commission (ASIC), the package is a resource to help teachers deliver consumer and financial literacy education in schools.

“Today’s young Australians live in an increasingly complex and digitally connected world with the proliferation of mobile phones and ready access to money and credit,” says Peter Kell, ASIC Commissioner. “The key to effective financial literacy education is to start young. We need to engage students and their families on a practical and accessible level – from the very beginning of their schooling.”

The need for such a program was highlighted in 2004, when the Commonwealth Bank Foundation, in partnership with Monash University’s Centre for Policy Studies
and Eureka Strategic Research (now the Ipsos-Eureka Strategic Research Institute), undertook groundbreaking research into the financial literacy of Australians. The results confirmed the pressing need for money education. 

  • Young people are most vulnerable: 16 to 25-year-olds make up 42% of the least financially literate members of the community.
  • The importance of school programs: Since 2004, the use of school studies as a source of financial-literacy information has increased from 31% - 39%, reaffirming the value of school-based literacy programs.
  • Benefits for individuals: The least financially literate members of our community suffered the worst effects of the global financial crisis in terms of job losses and reductions in working hours.
  • Economic benefits for Australia: Boosting financial skills for 10% of Australians with poor financial literacy can create 15,000 new jobs and increase Australia's gross domestic product by $6.2 billion annually over the long term.

It’s obvious that teaching financial literacy in schools is essential both for our children and as a long-term investment for the country, but is there anything that parents can do themselves?

Creating financially aware kids

  • Start early: As soon as your kids are old enough to show an interest in the ATM or the cashier at the supermarket, explain what you’re doing. Show them what $2 or $5 can buy.
  • Put money in their hands: In our cashless society, it pays to actually show your children coins and notes. Test them on their names and denominations.
  • Cultivate the saving habit: Encourage children to put loose change into a clear savings jar so they can see it grow. Open an account for your child and take them to the bank to deposit their savings.
  • Pay pocket money for odd jobs: Rewarding your children with pocket money for small chores done around the house is a great way to show them that money doesn’t magically appear from ATMs, but has to be earned.
  • The art of budgeting: Teach your kids how to budget. Give them a fixed amount of spending money each week and show them how much they can afford to spend each day to avoid running out.

As money becomes less tangible and more virtual, endowing children early on with financial skills is becoming increasingly vital. Giving children this education alongside their ABCs and arithmetic will not only protect their future, but could prove beneficial for the entire country.

 For more tips about money and kids, head to The Beanstalk.

Things to know before you Can: This advice has been prepared without considering your objectives, financial situation or needs. Because of that, you should, before acting on the advice, consider its appropriateness to your circumstances. Terms and conditions for transaction and savings accounts mentioned are available here (PDF 660KB). Please read our Financial Services Guide (PDF 60KB).

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