Australian parents want to empower their children to be financially literate and independent while spending safely, new research shows.
Gone are the days of simply coins in a money box, it seems, with Westpac’s Youth Money Report showing that three in four parents are already teaching their children some form of financial digital literacy.
Almost three quarters (72%) of parents are happy for their child to have a transaction account and three out of five (61%) are happy for them to have a debit card.
However, parents are concerned about online safety and spending, with close to two in five parents noting one of the biggest challenges is not having controls in place to stop online threats (37%) or oversight on what their child is spending money on (37%).
Three in five parents still pay pocket money in cash, yet nine in 10 who give cash would pay it digitally if their child had their own bank account.
Chris Brell, Acting Managing Director Cash & Transactional Banking, thinks talking about money early and enabling children to save (and spend) helps develop important financial literacy skills.
“Successful saving starts at home”, Brell says.
“It is nice for the tooth fairy to still pay in cash, but learning the value of the digital dollar is key to setting up kids to be savvy savers. Giving kids the freedom to access their money in cash or digitally from an early age, with oversight from their parents, enables them to practice good habits.”
Here are some of Westpac’s top tips for teaching kids about money:
Talk about safety online. Having an open and ongoing conversation with young children about how to stay safer online will open lines of communication with them to keep track of what they are viewing and doing online.
Give them the foundations. Starting young children with an understanding of what money is, where it comes from and why we need it will arm them with the basics of money and its value.
Include them in family financial conversations. Hearing the family talk about budgeting and bills can teach children by example and help remove any potential fear of talking about money to a parent or a caregiver in the future.
Activate controls and set boundaries. Set up relevant parental controls on devices and their bank account and debit card. Discuss how safety features and spending boundaries help keep them and their money safe, and their savings growing.
Use pocket money as a teaching tool. Parents can use chores and pocket money to demonstrate how to save, spend, manage, and store it. Help them set up a budget to keep track of their money and how they want to use it.
Discuss needs versus wants. Understanding the difference between needs and wants can be difficult for young children, but it is essential for managing money and spending.
Lastly, set goals. Money can be fun. Setting up savings goals with your child that are both age-appropriate and exciting can instil good savings habits and teach them discipline.
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