According to MyState Bank managing director and CEO Melos Sulicich, parents who provide their kids with a solid level of financial literacy are setting them on a good path.
“It’s never too early to talk to kids about money, and many will start asking questions from a young age about different expenses,” he said.
“Encourage this interest and teach them about financial concepts at an appropriate age. That way you’ll give them a firm financial foundation from the outset, one of the best gifts a parent can give their kids.”
He urged: “Giving kids a good grounding in sensible money management sets them up for life.”
MyState said parents could use online share games, like the one offered by the ASX to encourage children to explore the processes of investment markets and how to buy and sell shares while monitoring their portfolios.
After all, MyState noted, most Australians have stakes in the game through superannuation.
Parents looking to encourage financial literacy can also consider giving pocket money digitally by opening up a bank account for their children and setting up a direct debit that can be cancelled if the kids slack off on their chores, or boosted if the kids take on more responsibility.
Opening up about the family’s finances – to an appropriate level – is also an important step in helping children understand money.
MyState said parents should talk about the different pay rates of jobs, the costs of buying a house or renting and the ways in which home loans work.
As this information could be too complex for younger children, the bank suggested families teach children about the costs of household items, the importance of looking for better deals and simple numerical literacy.