Children like to spend money – particularly yours. But however good they are at asking their parent to pay for a magazine or lolly at the supermarket, this is often the extent of their financial awareness.
Children hear finance-associated words all the time, whether it’s from parents, media or advertising. Despite this, children don’t know or understand what these terms mean, even if they have a general awareness if things like interest and superannuation.
There is a general assumption that schools should be the one to teach these things. We expect school leavers to be fledgling adults, armed with all they need to know to function in a financially mature and informed way. Sadly, this is a misnomer.
Unless students choose subjects such as Commerce, Business Studies or Economics, most classes provide little exposure to finance – although Mathematics does touch on the calculation of interest. This is where parents have an opportunity to teach their children the nuts and bolts of finance.
To most children, anything financial is ‘money and stuff’. They may know some of the terms that make up the topic, but the meaning is usually missing. It isn’t until they start to engage with the wider world and attain some independence that they begin to understand the importance of finance.
For primary school children, financial education needs to be quite basic, based around an understanding of terminology. Children experience and repeat this as they play and imitate in games such as ‘shop’, marking the start of the journey. Once students reach high school, their ability to process in a more abstract and relational way increases and so too does their ability to process more of the complexities involved a greater variety of financial aspects .
One of the best ways to teach finance is to have discussions at home. Parents who teach their senior school-aged children some financial literacy will put them in good stead for the future. If they can start to grasp the concepts, they will be more astute in adulthood.
Try to be factual with younger children, and show them everyday financial activities such as paying bills, using ATMs, and using cash at supermarkets.
When children reach the teenage years, it becomes more important to expand their knowledge base. As parents, it is our job to teach our children independence, including financial. Discuss pay, including how it is calculated and deposited into accounts. Take your teen to open their own savings account, and encourage them to keep track of their money.
When you feel they are ready, encourage your teenager to get a job – even if it’s only a few hours a week. Part-time jobs are an incredible way for teens to see the ‘how’ of work and financial management. Talk to them about money management, checking their pay slips, tax file numbers and superannuation.
When they are able to see the value of an hour of work, they are more likely to think twice when spending money. The responsibility of a job will also help with social and emotional development. Both at home and at school, it is very hard to make children see the benefit of learning about finance, but by having a job, they can experience it.
Parents can make the greatest contribution to the education of teens – showing them the application of what they have studied and helping them piece everything together. As a parent, I recognise that children don’t always want to discuss their classes and what they are learning. But don’t give up. Look for signals to demonstrate that they are ready to listen and hear what you have to say, and be proactive in taking opportunities to involve your children in the practical implementation of money.
A young person who is money savvy and financially literate is a young person who can contribute and move toward independence.
About the author:
Vanessa Purnell is a Commerce Teacher at Waverley College in Sydney. She teaches in the Commercial Studies Faculty with subjects including Economics, Legal Studies, Business Studies and Commerce.
Vanessa has a Bachelors Degree in Secondary Humanities from The University of Sydney and a Masters in Education from UNSW.
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