When it comes to teaching young children about money, some parents struggle to understand how to approach the topic – especially if they feel they may not be setting the best example of financial literacy.
But talking about money within families should be seen as something positive, rather than a complicated secret – especially when there is little in the way of formal financial literacy education offered in Australian schools.
Lesson plans help Australian students get MoneySmart
To encourage more educators to help Australian students understand financial literacy and learn how to manage money throughout their life, MoneySmart is an online government resource that aims to show Australians ways they can take control of their money with free tools, tips and guidance.
For Australian school students, the site offers a range of practical lesson plans teachers in both primary and secondary schools can easily implement. The topics have been chosen in collaboration with the Australian Curriculum, Assessment and Reporting Authority (ACARA) and are aligned to the Australian Curriculum Version 9.0, to offer engaging activities that bring everyday financial topics into the classroom.
What is the Ecstra Foundation?
Ecstra Foundation describes itself as a grant-making charitable organisation that is committed to building the financial wellbeing of all Australians.
When it comes to equipping younger Australians with financial knowledge and good money habits, Ecstra believes that financial literacy education benefits the entire Australian community and economy.
This is because financial capability impacts everything from housing, employment, physical and emotional wellbeing, and security in retirement.
Ecstra launched Talk Money in 2022. It’s a free, national financial education program designed to help Australian school students learn money lessons for life.
It’s continuing to expand its offering nationally but, as of 30 March 2023, Talk Money had already engaged with 620 schools and delivered more than 3,600 workshops.
The initiative offers facilitator-led workshops for Australian students across years five to 10 and helps reinforce learning and key concepts in the classroom and at home.
Financial literacy learning starts at home
But although children are influenced by a range of sources, including friends, teachers at school, the online environment and the media, influence, the reality is that one of the most significant influences on their financial socialisation – defined as the attitudes, behaviours and knowledge that promote sustainable financial wellbeing – comes from their parents (or main caregivers).
For parents keen to help children learn about savings and budgeting, here are five ideas to explore:
Set goals – and measure success
Creating (and sticking to!) financial goals is an important part of learning how to manage money. It also teaches important lessons about how to prioritise financial needs.
How exactly these goals should be recorded (digitally or on paper?) is up to the individual but studies do show that people perform better when they document what they need to do.
For young children who are visual learners, clear labelled jars can be used to put coins or notes in. This gives them a way to watch the money build up each time they make a budgeting or saving decision that helps them add more money to the jar.
Budget
Creating a family budget and explaining it to them (in a way that is age-appropriate) is a great way to teach them how they can budget with their own pocket money. Explain how much money you have each week and what it needs to be spent on.
Learn to save
The motivation to accumulate savings becomes stronger for young people when they link it to a specific financial goal.
By helping younger children understand the importance of saving for something they can relate to, such as a special event or family celebration, parents can help sow the seeds of sensible money management.
Teaching lessons of patience and delayed gratification (sure, they could take the money from their piggy bank/savings account now but that means they will the chance to have even more money saved in the future), can be challenging but with perseverance and consistency, they can be taught in time.
Understand the difference between saving vs investment
Teaching children about saving helps them understand how funds can accumulate when they make decisions to spend less and learn to see the difference between wants and needs.
Lessons about investment go deeper and teach children that, with careful management, buying an asset, or letting money accumulate compound interest, can then provide a return.
Share the wealth
Children are taught to share from a young age and it’s a lesson that can be extended to financial education, with the reminder that money isn’t just something to spend or save – used wisely, it can help others.
By encouraging young children to donate to a cause they care about, they learn how their ability to budget and save can also have benefits that help create meaningful change in someone else’s life.
