Financial literacy in young Australians

Recently we wrote a blog on budgeting aimed at helping you find ways to achieve your financial goals for the coming year. Given there’s nothing like a new year to ring in the changes you’d like to see moving forward, we thought it might be the perfect time to talk about improving financial literacy in young Australians that count – yours!

According to Australian research, despite the media going wild over teen millionaires, educators have noticed that financial literacy in young Australians is in decline. So what can you do to change that for the children and young people in your life? Here are three tips to help.

1. You can improve financial literacy in young Australians by talking to your kids about money

When it comes to talking about money with your young family members, start early and do it often. If you think about it, all a lot of kids see these days is you tapping a piece of plastic, again and again and again – as often money has no real form. And something that abstract can be hard to get your head around for a child (a lot of adults have that issue too – wondering how they possibly spent that much when the bills come in). Interestingly, research shows talking to your kids about how much ‘life’ costs, how much you earn, the concept of tax, what bills are and why you get them, even when money is tight, say once a week, is likely to result in them having better money judgement as they get older. What you’re aiming to give the child is a better understanding of the value of work – what goes into earning money and the value of what money can actually buy.

2. You can improve financial literacy in young Australians by starting them working early

So, hmmmm, pocket money – now there’s a heated discussion waiting in the wings. How much to pay, when, what for, what the kids down the road get, etc. Research shows the best outcomes result from kids earning money for work actually done (not just doled out every week) and to have that amount uncapped – don’t worry – it’s a rare kid that goes the whole hog!). So until your child can get a job for themselves (paper run, babysitting, wait-staff, tutoring, setting up their own market stall or online concern) sit down and ask them what tasks they think they could contribute to the family. Come up with a list. Decide what’s just part of being part of the family (ie: done for free) and then negotiate a rate per job for the rest. Then encourage them to keep track of what they do and when and sort out when/how money will be paid – weekly is best – they see the results of their work and you’re not hit up for a huge sum every couple of months. Paying in cash is best, because then not only do they see the money building up, they also get to decide what to do with it. Very swiftly they’ll come to terms with no-one’s going to pay them a million dollars to wash a car or unpack a dishwasher. Your job in all of this is to stand firm when they ask for more money to buy the latest thing that costs more than they’ve currently got in the piggy bank. Of course, once they can earn their own money, encourage them to get a ‘real’ job where they then start having to deal with working with others, being on time and other new rules and challenges.

3. You can improve financial literacy in young Australians by modelling good money management for them

Just like any other positive behaviour you’re trying to instil in your children, there’s a truckload of research showing better outcomes result when children see others they’re close to doing it first. So when it comes to good money management, they need to see you considering the consequences of your actions, paying bills, weighing pros and cons of purchasing something or not, setting money goals and actively pursuing those and of course lodging tax returns – which can be a great lesson in and of itself.

Of course that’s where we can help. If you’d like to discuss your personal or company taxation, or moving your business accounting to the cloud to make BAS and GST easier, we’d be delighted the chat further. You can call us on 6023 1700 or get in touch via the form below.