Do today’s children have any understanding about money at all?
One of Australia’s biggest banks recently surveyed over 1,000 parents and children to assess the parents’ and children’s competencies across five core areas of financial acumen. The results are in! Here’s where the children sit in 2016.
- Kids definitely understand the concept of earning money (parents are doing a great job teaching kids about earning money)
- Kids definitely need help with understanding what budgeting means – and it’s not simply numbers on a piece of paper.
- Kids start to understand the concept of investing around the age of 11 years old
- Kids are great at saving money – this is fantastic news given the GFC was the result of not saving enough.
- When kids spend their money, they need a bit of help in working out what to spend their hard-earned money on.
- Kids from households with income less than $50,000 are just as financially literate as kids from households with income more than $150,000.
- Kids from households with income less than $50,000 are more financially literate than kids from households with income between $50,000 and $150,000
What were the five core areas of financial acumen?
Concept of earning
The results found that children had very strong knowledge around the concept of earning money. This is because more than two-thirds of primary school children (ages 5 – 12 years old) in Australia receives pocket money. 4 out of 5 of these children are expected to complete tasks to earn their pocket money and they understand that they can get more money by doing extra tasks around the home.
Concept of budgeting
The survey also found the parents’ strongest skillset was in budgeting however surprisingly budgeting was a weakness in the children’s knowledge. Whilst half of the children know what a budget is, the other half think a budget is simply a sheet of paper with numbers on it.
This means parents are teaching their children the concept of earning money, but we are not passing down our skills in budgeting.
Concept of investing
The survey also found that most children struggled with the concept of delayed gratification, with over half of the children surveyed saying they would take $5 now over a larger amount later. However, all is not lost, because the survey also revealed that the 11-12 year olds are more likely to wait for more money. This shows that perhaps the concept of delayed gratification begins to ‘click’ at around this age.
Concept of saving and spending
It is delightful to find that nearly 70% of children surveyed said they liked saving more than they like spending. However, when the children spend their hard-earned money, nearly half of the children surveyed think it’s more important to spend on things they want rather than over things they need.
Rich parents vs poor parents
The survey confirms that it is not only the rich who are capable of teaching their children good money habits. In fact, children from ‘poor’ households (those with income less than $50,000) scored better than children in mid-income households. So, financially savvy children do not necessarily come from rich parents!