It can be challenging to help children understand the concepts of spending and saving when they watch you ‘tap’ and ‘swipe’ instead of handing over physical money. Recent research from the Financial Planning Association (FPA)1 reveals that 68% of Australian parents are reluctant to speak to their kids about money, or they don’t know where to start. But the report also revealed that children whose parents talk to them about money are more curious, confident and financially literate than their parents were at their age. And parents who receive financial advice are much more likely to feel comfortable talking to their kids about money.
What type of money parent are you?
The FPA found that parents fall into one of four categories when it comes to talking to their kids about money
You feel very comfortable talking to your kids about money and are transparent about money matters, but your conversations are infrequent and unplanned.
You feel comfortable talking to your kids about money and encourage good money behaviour through frequent and in-depth conversations.
You don’t feel comfortable talking to your kids about money and have infrequent conversations, or none at all.
You don’t feel comfortable talking to your kids about money, but you do it anyway – even though you often feel awkward or uncertain when doing so.
Learning from ‘Engaged’ money parents
Engaged money parents raise children who are equipped to deal with the digital money world, and teenagers who are prepared for the financial aspects of their first jobs.
Here are some actions you can take today to become an engaged money parent:
- Give your kids pocket money from a young age so they can learn about spending and saving (the average amount of pocket money ranges from $6.20 a week for kids under nine years old to $17.60 for teenagers) 2
- Play shopping games with younger children to build their financial literacy and help them learn about ‘needs’ vs ‘wants’
- Teach your kids about different types of money, e.g. cash, credit cards, in-app purchases, cryptocurrency
- Include your children in household discussions about family finances
- Use online tools and resources to engage your kids’ interest and attention – like the Government’s MoneySmart website (moneysmart.gov.au)
- Encourage older children to get an after-school job to teach them about budgeting, tax and superannuation.
How you can look after your own financial wellbeing and role model good money behaviour
The number one reason parents give for being unable to talk to their kids about money is not feeling good about their own financial situation.3
Children learn money habits from their parents – both good and bad – so it’s important to be a good money role model for your children by taking care of your own financial wellbeing and building your financial literacy and confidence.
Start a conversation today
Seeking advice from a financial adviser can help boost your financial confidence, with a plan in place that creates a lasting, positive legacy for your children and grandchildren. By taking care of your own finances first, you can lay the foundations for a better financial future for your whole family. If you would like to know more about how to become a positive money role model for your children, speak to your financial adviser.
Speak to us if you would like to understand more about how this information might impact your financial situation. Call Menico Tuck Parrish Financial Service on (07) 4044 7888 to make an appointment.
Source: Financial Wisdom (released August 2018)