Financial literacy content is included in the Australian curriculum – but there is no consistent delivery of how it is taught across the education system. It’s an element of life skills-related education that is often delivered within mathematics for secondary school students – but for teenagers entering the world of casual and part-time work, understanding the tips and tricks needed to navigate the changing of the taxation-related guard as a new financial year begins is often left to parents and carers.
Katrina Samios, CEO and Director of Financial Basics Foundation emphasises the critical importance of financial literacy as the gateway to essential life skills. She advocates for financial literacy to be taught as a standalone subject in schools, stressing that topics such as budgeting, saving and investing are fundamentals for young people’s future success.
The national financial literacy charity launched in February 2022 and aims to deliver to young Australians, between the ages of 12 and 24 years, the basics of effective financial management. It’s a mission it drives by engaging its networks through a series of programs designed to educate young people about financial issues; facilitate dialogue and professional development for educators; and establish opportunities for engagement between its sponsors and the communities in which they operate.
To help young people learn more about money management, the Financial Basics Foundation will run their ninth annual Suncorp Bank ESSI Money Challenge competition from Monday 19 August to Friday, 30 August 2024.
Money tips for working teens
Until then, with an eye on providing tips specifically for young people who are already in, or are about to enter, the workforce, Samios shared some practical insights and advice with EducationDaily:
As the CEO of the Financial Basics Foundation, I would advise parents to take the following steps to help their children lodge their first tax return:
- Collect essential documents: Ensure your child has all necessary documents, including their payment summaries (now called income statements), bank statements, and any receipts for deductible expenses.
- Create a MyGov account: Assist your child in setting up a MyGov account linked to the Australian Taxation Office (ATO). This online platform simplifies tax lodgement and provides easy access to pre-filled information from employers and financial institutions.
- Understand deductions and rebates: Familiarise yourself and your child with common deductions for students, such as work-related expenses, and potential entitlements like the low-income tax offset.
- Use ATO resources: Encourage your child to utilise the ATO’s educational resources and tools which guide users through the lodgement process with straightforward prompts and tips.
- Maintain good records: Instil the habit of keeping detailed financial records. This practice not only aids in accurate tax reporting but also sets a strong foundation for future financial management.
- Seek guidance if needed: Consulting with a tax professional or utilising reputable online guides can help ensure your child’s tax return is correctly lodged.
Tips to encourage teens to save and spend wisely
The Financial Basics Foundation has designed a suite of free resources to help parents teach their teens about money.
Samios says developing good money habits from an early age can be key to your child’s financial well-being. “Research shows that financial well-being is higher for people whose parents provided them with advice on money matters when they were growing up. We know it’s one thing to explain a financial concept to young people but demonstrating it with real life behaviours can really help them understand it better,” she told EducationDaily.
- Set financial goals: Encourage your teenager to set specific, achievable financial goals. Whether it’s saving for a big purchase, future education, or simply building an emergency fund, having clear goals can motivate them to save.
- Create a budget: Teach your teenager how to create a simple budget. Show them how to track their income and expenses, allocate funds for savings, necessities, and discretionary spending. In this age of consumerism and constant advertisements, it is crucial to equip young people with the knowledge and skills to navigate the world of personal finance responsibly.
- The Spending Checklist provides practical tips on budgeting, saving and making intentional purchasing decisions. It is designed to inspire young people to become conscious consumers who value financial well-being and sustainable choices.
- Open a savings account: Help your teenager open a high-interest savings account and encourage consistent active saving. Explain the benefits of earning interest and how compound interest can help their savings grow over time.
- Use financial tools: Introduce them to budgeting apps and online financial tools. These can help them manage their money more effectively and provide insights into their spending habits.
Top five financial rules for young people
The Financial Basics Foundation has developed a toolkit of practical activities, fact sheets, tools and tips designed to help parents build the financial capability of their children. Resources aimed at young people themselves are also available.
In particular, Samios says the five financial rules of thumb focus on teaching young people simple and practical behaviours around planning for the use of money.
“By implementing these tips, parents can help their teenagers develop strong financial literacy skills, preparing them for a financially secure future.”
- Pay yourself first
- Spend less than you earn
- Shop around
- Time is money
- Sleep on it
A collection of bite size animated videos designed to help teens deal confidently with the financial decisions and responsibilities that come with learning to manage their own money and establishing their financial independence are another positive resource.
The first five videos cover the basics of Banking, while the next series, due for release later in 2024, will cover the basics of Earning and getting your first job. Samios told EducationDaily that subscribing to the Financial Basics Foundation YouTube channel will provide easy access to all future financial literacy updates.
Key questions to ask working teens
Samios recommends parents and carers create conversations to ask working teenagers some basics about their money management of their casual or part-time employment.
- What is your hourly rate? Verify that your teenager knows their hourly wage and confirm it aligns with the relevant award rate for their job and age group.
- Do you receive payslips? Ensure they are receiving regular payslips that detail their hours worked, pay rate, and any deductions. Payslips are crucial for transparency and accountability.
- Are you paid for all hours worked? Confirm they are being paid for all hours worked, including overtime and any extra shifts. They should also be aware of penalty rates for working on weekends, public holidays, or late hours.
- Do you know your entitlements? Discuss entitlements such as paid leave, breaks, and superannuation contributions. Understanding these benefits helps ensure they are fully compensated.
- Are you aware of any deductions? Check that any deductions from their pay are legitimate and correctly documented. Common deductions include tax and union fees.
Here are some steps to help build financial capability:
- Start the conversation: Begin by having open and honest discussions about money. Share your own experiences, both successes and mistakes, to make the topic relatable and build confidence in your teens when discussing personal finance
- Use educational resources: Leverage the many financial literacy resources available. Financial Basics Foundation offers a variety of programs and materials specifically designed for young Australians to build their financial knowledge.
- Teach budgeting skills: Show your teenager how to create and manage a budget. Help them track their income and expenses and discuss the importance of living within their means.
- Encourage saving: Introduce the concept of saving by helping them set up a savings account. Encourage them to save a portion of their income regularly, emphasising the benefits of building a financial cushion and setting financial goals.
- Discuss the basics of credit: Educate your teenager about credit, including how it works, the importance of maintaining a good credit score, and the potential pitfalls of debt.
- Introduce basic investment concepts: Explain the basics of investing, such stocks and bonds, and the concept of compound interest. This knowledge can help them understand the potential for growing their savings over time.
- Use real-life situations: Turn everyday activities into learning opportunities. For example, involve them in planning a family budget, discussing utility bills, or making a grocery list to stick to a budget.
And for parents who may worry that the financial horse has already bolted from their teenager’s attitude to balancing their bank account, Samios has some reassuring words.
“It’s never too late to start improving your teenager’s financial literacy”.
