As Australia’s economic woes bite households hard in the lead-up to Christmas, experts are urging parents to equip their children with financial literacy skills.
Leading financial literacy educator Dr Carly Sawatzki, a professor at Deakin University, works with teacher associations and schools to develop financial literacy lessons.
She says parents need to take ownership over the job of educating their kids about finances.
The task of teaching our kids about money should start early, explaining where money comes from to younger children and how not to overspend.
Dr Sawatzki urged parents to have regular, age appropriate conversations with their children about the importance of budgeting; compound interest; how buy-now-pay-later services and banks work; credit cards, personal loans, superannuation and tax; and related topics.
There’s definitely room for improvement, with the Australian Competition and Consumer Commission even releasing guidelines to help prevent unauthorised in-app purchases, including transactions made by children.
Dr Sawatzki says the onus is on parents to help their kids attain an understanding of money. Her research suggests financial decision-making depends on our values, expectations, emotions and family experiences.
Her advice comes days after the Victorian Government announced a ban from next year on low-quality school banking programs run by financial institutions, putting an end to the long-running Commonwealth Bank-run Dollarmites scheme.
The ban follows frequent concerns raised about the quality of education and financial literacy outcomes delivered by school banking programs.
Dr Sawatzki says: “We shouldn’t be getting our financial literacy from extremely profitable banks, because this is at the expense of being able to be critical of the finance industry.”
“Parents are teaching their children about money all of the time by their actions, whether they realise it or not. In fact, financial values are either imparted in explicit conversations, or through the way parents model their own financial behaviour,” she says.
Meanwhile, Perth money coach Matt Hern urged parents to step up their own financial capability before trying to impact financial advice on their children.
It’s important that parents consider whether they are good role models here, and look at what they need to learn about finances so they can implement positive change,” he says.
Opportune teaching moments include when children start receiving pocket money, when they start their first job, and when they open their first bank account, according to Dr Sawatski.
Allowing children to make some financial mistakes, such as purchases with birthday gift cards that they will regret, is all part of the learning process, she says.