So obviously we’re all spending a lot of time at home. Xinja would like to help make this time well spent, by offering a blog series – ‘making it count’ – to help boost your basic financial literacy & get money fit during iso. Today we’re looking at how to get your kids money smart, given you’ve got them at home!
Recently parenting got a lot harder, now that you also have to take the role of teacher. As parents, you have to tackle almost any topic, no matter how tough…but the money conversation? How are we doing?
Financial literacy is now globally recognised as an essential skill. However, according to an OECD study, despite testing well for financial literacy, Australian youths are making poor money decisions and are not financially savvy.
Money Advice Service’s research has shown that while parents teach their kids about finance differently, it is clear that parental actions have a greater impact on our kid’s financial capability than a financial education in school.
So why not make the most of the lockdown time and teach your child(ren) something that has lifelong benefits (ie: good money habits and mindsets)? Here’s a quick guide to help build a good relationship with money early.
According to Money Advice Service research, while financial capability is made of several elements, ability (children’s financial knowledge and skills), connection (children’s engagement with money and their access to financial services or products), and mindset (children’s values and attitudes towards money) are the most important factors.
Research from Cambridge University on Habit Formation and Learning in Young Children confirmed that kids’ money habits can be set by the age of 7, highlighting the importance of fostering those habits young, and why we should not underestimate the power of our own habits (be they good or bad!). We will also cover some bad financial habits that parents might have unintentionally passed on to their children…
Also, it’s never a bad time to walk the walk, teach girls and boys about valuable money mindsets like financial equality and help them practice them. (See how #XinjaWomen unpack the topic of gender financial equality).
So here’s the hard part……just when they’re getting to the stage when they really need to ‘get money’, they’re probably least receptive to anything you say……but persevere! This is the moment to step up the complexity of what you’re talking about and the responsibility they have to take and model money management.
According to CNBC, there are a few things you can teach your teenage kids to help them be responsible for their money and make money relatable, such as:
There are lots of ways to encourage money management in teenagers like setting up a savings account to start saving for something further in the future and bigger, like a trip somewhere, or a bike or car. And how about getting them to pay their own mobile bill? That will focus their minds 🙂
Forbes also stressed the importance of teaching kids (and people of all ages!) the danger of credit cards. Introduce the concepts of good debt vs bad debt and help them understand the differences, so that they don’t become victims of the bad ones.
According to MarketWatch, a recent study found that “parents with bad money habits are likely to pass them onto their kids”. Mozo has a handy checklist on how to avoid accidentally teaching your kids bad financial habits, like instant gratification, expecting money for nothing, relying on credit, and fearing debt (too much that is…..)
Who says learning about money has to be dull?!
Whilst some of these might just get eye-rolling from the teens, younger kids might like the “make your kid a money genius: the activity kit” to learn good financial habits through role play, this holiday-themed pie activity for budgeting or some of these cute games and videos by ABC Education. These Sharemarket Games offered by ASX to help them understand investment and the economy are a bit more sophisticated for the older ones, and you can also order the Rich Dad, Poor Dad CashFlow Game online. Speaking of which, Rich Dad, Poor Dad (book) is an oldy but a goody about money mindset, good to read for children of any age (including those up to 50!)
So enjoy having the little darlings with you, and see if you can release them back out into the world with a sharpened sense of how money works. Good luck!!
If you’ve got suggestions of finance 101s you’d like us to cover off in this series, do head to the forum to let us know.
PLEASE NOTE:
The above is general advice only and obviously Xinja has not considered your or your children’s personal financial situation in preparing this information.