During Global Money Week GWM we sought contributions from passionate financial professionals to share money tips for kids and young adults. Read their insights on the following topics:

Importance of Financial Literacy 

 

 

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Educating kids about financial concepts may not be the first topic to discuss on the weekend - wondering if kids may find it boring or there may be no time in-between sports matches, birthday parties and other activities. In addition some money concepts might be hard to explain.

 

However, in order for kids to make wise choices later in life, they need to be educated and supported in their life and financial journey early on.

 

Being young, carefree and enjoying life doesn’t mean that kids don’t come across money concepts  - when I was young I was certainly thinking about getting a new Nintendo game / Walkman and cassettes (which later turned to Discman and CDs) and I was planning to spend birthday money for movies or traveling. I don’t remember being taught about money, apart from figuring it out myself from personal interest, making mistakes along the way or going to university to study applied finance. I wish I learnt money lessons earlier to understand the basics about earning, saving, budgeting and spending money.

 

Inspired by the Global Money Week (GMW) a few months ago, we really stopped to think hard about the importance of financial literacy and the role it can play to shape people’s lives.

What would I have liked to know about money early in life.

1. What should kids learn about money early in life?

 

Simple basics that would help kids be more money smart include making distinction about wants vs needs and developing saving habits etc.

 

“Kids should learn to choose investments to suit their goals. For short term savings use a high interest savings account with no fees. For longer term use a low cost equities based exchange traded fund (ETF) that is well diversified. If they take the risk now they can actually get the power of compounding working for them sooner and maybe take less risk later in life because of the hard work their money did in the early years.”

- Liam Shorte, Director, SMSF Specialist Advisor™ and Financial Planner at Verante Financial Planning.

 

“Money is finite and it doesn’t just appear by swiping the magic card.”

- Ash McAuliffe, Certified Financial Planner at McAuliffe Wealth Management

 

 

2. Ways to improve financial discipline

 

It’s extremely important to learn and practice delayed gratification. Perhaps a good way to do it is to set money aside in a term deposit that can be “locked away” for 3 months, 6 months etc.

 

“Kids can start understanding compound interest and term deposits to help grow savings with protection of principal / capital.”

– Hector Ortiz, CEO at fintech Cashwerkz.

 

“Put the value of items in a context children can understand. For a little kid a $30 toy is the same as 30 McDonald's ice creams! For a teen, a movie ticket is doing an entire hour work.”

- Isobel Yeo, Training Executive VIC at IRESS.

 

 

 

3. How to improve financial literacy?

 

It’s been widely acknowledged that financial literacy needs to be improved for all ages. Financial service providers and financial planners can develop educational campaigns, run seminars and work directly with their clients to educate them on financial basics. They can also provide easy to understand information that the clients can also pass on and discuss with their kids. 

 

"Help them identify something they want to save for and calculate how long it will take and help them towards their goal. Start small so the reward is soon and gradually extend the goal and duration. Put this into practice regularly and have fun with it."

- Garreth Gumbley Founder Frollo

 

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We developed the Money Book and Calendar to support financial businesses in engaging, educating and keeping their clients motivated.  The document is also available for white labelling. Get in touch!

 

 

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Carlos S Mauleon, Director - New Business Initiatives at Biznex Consulting - Strategic Business Initiatives for Financial Services, talks about the importance of not only financial knowledge but financial discipline. 

 

1. What should kids learn about money early in life?

2. Ways to improve financial discipline

3. How to improve financial literacy?

The information showcased in this site is general information only. It is not intended to be a recommendation, offer or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.