TALKING DOLLARS & SENSE
Making sure your kids are money-wise is invaluable, explains KYLIE MACFARLANE
Unfortunately, financial literacy isn’t a topic you’ll see on your child’s school curriculum. So it’s time we take charge of the money lessons we’ve learnt over the years – saving, applying for home loans, paying off credit cards, etc – and pass them down.
Commonwealth Bank general manager of corporate responsibility Kylie Macfarlane reveals where to start, how to make lessons stick and what to avoid at all costs.
Sooner rather than later
“It’s never too early to start teaching your kids about money,” says Kylie. “Research has shown our early experiences with money can shape how we view and approach money management as adults. As the mother of four-year-old twins, I started introducing concepts such as ‘needs’ and ‘wants’ from approximately three years of age.”
Keep it fun
Parents who teach their kids about money in a fun and engaging way can have a positive impact on their children’s financial knowledge, outcomes and wellbeing later in life.
“You might want to make savings a competition to see who in your family can save the most,” Kylie suggests.
Tracking results with a whiteboard and rewarding kids with an additional boost to their savings if they reach their goal ahead of time or pick up extra chores around the house can make it a positive lesson.
Savings game
Encouraging your kids to start a savings account will set them up for life. “The first step is to get your child to set some savings goals,” says Kylie. “Have a conversation with them about what they’d like – that might be something small like a new game app or something a bit more expensive like a new bike.”
Next, Kylie suggests helping them map out a plan to achieve their savings goal.
“Come up with strategies and plans to put away small amounts of money regularly, so they can build a savings habit,” she adds. “And remember to reward their savings behaviour through praise or even a matching program.”
What and when
The most effective education is provided as close as possible to a particular financial decision – so use relevant life events to talk to your kids about money.
“For instance, buying a first car is a great opportunity to talk about insurance and personal loans,” Kylie says. “When your child gets their first job, have a chat with them about superannuation.”
There are, of course, other teachable moments where you can have the money talk. And even when you’re not actively teaching them, they’ll also be picking up on your financial behaviours.
Sticky subjects
Similar to the above, make sure you’re not teaching your child money lessons that don’t apply to their life stage.
“Talking about superannuation in early primary school will not be as effective as the lesson isn’t relevant,” Kylie reiterates.
It is also important to speak with your kids about financial wellbeing and safety.
“This covers everything from cyber safety to how to have positive money conversations later in life,” adds Kylie. “In the same way we teach children about appropriate physical and emotional boundaries, we should also teach them to set appropriate financial boundaries.”
To help improve your financial wellbeing, visit financiallyfit females.com.au. Always consider your personal circumstances before acting on financial advice.