Raising money smart teens
HOW PARENTS CAN HELP CHILDREN UNDERSTAND THE VALUE OF A DOLLAR
Teenagers today face fresh money pressures as smartphones, online spending and the disappearance of cash create challenges that never impacted their mums and dads.
Parents are the main money influence on teenagers, finance specialists say, and need to step up because Australia’s education system is patchy when it comes to financial literacy.
Fortunately there are several ways parents can help produce young adults who are smart money managers.
Gateway Bank CEO Lexi Airey says time is on teens’ side, and open and honest conversations about money are important.
“Being faced by consumerism at every turn can pressure teens into feeling like they need to keep up with their peers and have the latest and greatest,” she says.
“It can be difficult to grasp the concept of money when we rely less on physical currency and spending can be as simple as tapping a phone or debit card.”
Airey suggests parents seek online resources to help with money advice, discuss household cost savings and in some cases consider having teenagers pay for some of their own expenses.
“Once teenagers reach 18 years, they need to be wary of buy-now pay-later services or credit to purchase items that they can’t necessarily afford right now,” she says.
MBA Financial Strategists director Darren James says many teens lack money awareness because swiping or tapping doesn’t have the same mental impact as handing over cash.
“The only place they will learn how to manage money is with their parents,” he says.
“There’s financial literacy coming into school curriculums these days but it’s still a long way from where it needs to be.”
James says there is a huge focus on educating people for high-paying jobs but not on managing income. “They end up getting that job but they have nothing to show for it, even though they should be in a really good position,” he says.
Learning about compound interest is vital: “It’s sacrificing something now for more in the future,” James says.
“Get them used to buying stuff only if they have the money for it.”
Daniele Jarvis has helped daughter Mia, 15, set up her own bank account, paid pocket money for weekly household chores, encouraged wise spending and showed
how family purchases were made through saving.
“It’s important to sit down with your child and to continually discuss money,” she says.
“Probably the most important thing is making your child understand the
value of a dollar.” Jarvis says teenagers focus more on money and at a much younger age than previous generations.
“The presence of social media in their lives from a very early age, advertising, and influencers have attributed to this,” she says.