Kiddipedia Financial Support Information
What is ‘financial literacy’?
Simply put, it’s a term used for being able to make more informed decisions when it comes to money. It’s all about understanding and applying financial skills, including saving and budgeting effectively.
Some financial literacy skills include understanding:
- What money is and how it can be exchanged
- Where money comes from and goes
- Basic financial services
- Financial records and the importance of reading and keeping them
- Attitudes around spending and saving money
- The risks associated with some financial products such as credit cards, payday loans, etc.
- The relationship between risk and return
- Where to access assistance when things go wrong.
Why is financial literacy important?
The Organisation for Economic Co-operation and Development (OECD) states “financial literacy is a core life skill for participating in modern society. Children are growing up in an increasingly complex world where they will eventually need to take charge of their own financial future.”
This is where parents play an important role in helping their children build good financial habits that will stay with them into the future.
How do you teach children about money when (almost) no one uses cash anymore?
Don’t worry, you can still give pocket money. Physical cash hasn’t disappeared completely, and a tangible amount can sometimes make it easier for children to grasp.
But if the trusty piggy bank is no longer ‘cool’ in your house, you can consider paying pocket money digitally. When you send funds directly to your children’s bank account it gives you the opportunity to teach them about money and technology simultaneously.
Set some time aside regularly to talk to them about their account, where the money goes, how it’s stored and how they can access it. Look at how they’ve spent it and ask them if they still feel happy with their purchases.
Keeping the conversation relatable and relevant will make them more likely to enjoy learning about money and (hopefully) mean they won’t need to bury their head in the sand later in life.
You might choose to give a standard monthly allowance or maybe you will set chores to be completed in exchange for pocket money – whatever road you decide, the golden rule is to teach children how to save and spend responsibly. Give them ideas on what they might want to spend money on and how exciting it can be to save in order to achieve it.
Needs vs wants
No matter the child’s age you can talk about the value of need vs want (e.g. new running shoes or the latest LEGO® set). Encouraging your children to wait a certain amount of time before making a purchase can also help them avoid impulse spending.
Getting those deals
Even when your children are still young enough to fit in the shopping trolley, you can involve them in your shopping process. Chat to them about products you need to buy, ask them to help you compare prices or deals, have fun counting how many products you’re buying and guessing how much it might cost. Children love to be involved and can learn lots from your discussions and actions.
Living expenses
Most of us can’t recall seeing a utilities bill until we had to start paying them ourselves, and at that point it can be daunting! Consider engaging ways to get your child involved (so they can see that WIFI actually costs money) by showing them your incoming bills and making fun activities from it. One way to teach them is by getting them to work out how many hours you might need to work in order to pay the bills.
My teenager has their first job – now what?
A first job is a great time to help your child understand the basics of how the economy works by talking about pay rates, taxes and superannuation. And it’s also the perfect opportunity to begin talking about what they want to do with their hard-earned money. Do they have short or long-term purchase goals? Perhaps you can ask them to cover the costs of some items such as their mobile phone or their weekend activities. Whatever method works best for you and your family – it’s a key time to start discussions and allow your child to begin their own money journey with your guidance and support.
Practical financial literacy resources
Visa’s Practical Money Skills for Life is the home of financial literacy education. With a diverse range of resources, Practical Money Skills helps provide people of all ages with the tools necessary for financial success.
National Financial Educators Council
The Immersive & Interactive Kids Financial Literacy Program will provide you with loads of free resources that can help your children learn the financial fundamentals in a fun way.
These free resources can teach children how to make more informed financial decisions and resist spending temptations; better enabling them to set and reach their own financial goals.
Money smart is also another great resource to help you teach your kids about money.
This article is intended as general information only and has been prepared without taking into account the personal financial situation, objectives or needs of the reader. Before acting on this information, you should consider its appropriateness, having regard to your objectives, financial situation and needs.
Karen Beard, Credit Union SA
Karen is Chief Member and Experience Officer at Credit Union SA, a customer owned banking organisation based in South Australia.
Karen oversees Credit Union SA’s Member Experience Centre, Broker relationships, Marketing, Mobile Lenders and Education and Community relationships.
With over 30 years working in finance, Karen has extensive knowledge in personal banking, member service and performance improvement.
Karen is passionate about ensuring young people have a strong understanding of banking and how to set themselves up for the future.
Website: https://www.creditunionsa.com.au/
