{"id":4946,"date":"2021-03-01T12:02:09","date_gmt":"2021-03-01T01:32:09","guid":{"rendered":"https:\/\/adelaideprivatewealth.com.au\/the-importance-of-childrens-financial-literacy\/"},"modified":"2021-03-01T12:02:09","modified_gmt":"2021-03-01T01:32:09","slug":"the-importance-of-childrens-financial-literacy","status":"publish","type":"post","link":"https:\/\/adelaideprivatewealth.com.au\/the-importance-of-childrens-financial-literacy\/","title":{"rendered":"The importance of children\u2019s financial literacy"},"content":{"rendered":"
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The truth is, adulthood is rife with financial challenges. The more prepared your children are, the better. From budgeting and saving, to understanding the true value of money, read our guide on teaching your kids financial literacy.<\/p>\n

Your role as a parent<\/h3>\n

As a parent, you play a vital role in helping your child establish positive habits around money \u2013 namely earning, budgeting, saving and spending. Often, this is based on your own personal experience with managing money.<\/p>\n

Fortunately, you don\u2019t have to be a financial genius to teach your child good skills. It can be as simple as involving them in very basic purchasing decisions and budgeting from a young age.<\/p>\n

The other important point to make is that, as they grow, their financial awareness and needs will change as they progress through primary school and into high school.<\/p>\n

We\u2019re committed to giving you the right\u00a0information and tools to guide your child\u2019s financial journey<\/a>\u00a0\u2013 and support you along the way.<\/p>\n

A great starting point (beyond this article) is to check out\u00a0ASIC\u2019s Money Smart guide for Teaching Kids About Money<\/a>.<\/p>\n

Understanding where money comes from<\/h3>\n

With the emergence of cashless transactions, children don\u2019t often see physical cash changing hands in their parents\u2019 day-to-day transactions.<\/p>\n

In turn, they might struggle to understand where money actually comes from \u2013 that it needs to be earned.<\/p>\n

It\u2019s important your kids understand that the plastic card in your purse or wallet is not an endless source of money. Here\u2019s what you can do.<\/p>\n

Introduce \u2018pocket money\u2019<\/strong><\/p>\n

Doing this early on is a great idea. Whether it\u2019s a \u2018cash\u2019 reward for doing chores, or some other task \u2013 it\u2019s a fantastic way to help your child understand how money is earned and the tangibility of physical cash.<\/p>\n

In other words, it will make it easier for them to establish the link between cash and digital money down the track.<\/p>\n

Use cash<\/strong><\/p>\n

You can do this for things like groceries or snacks, just so that your child can see the transfer of physical cash to pay for things.<\/p>\n

At the checkout, explain to them that having a job and going to work is how you earn money, for example \u2013 in the same way that they earn pocket money for doing chores \u2013 which allows you to then buy groceries for the family.<\/p>\n

The value of money \u2013 needs versus wants<\/h3>\n

For children earning pocket money, understanding what their money can and can\u2019t buy is an important one. Here, the lesson lies in your child realising the implications of their spending choices.<\/p>\n

Kids learn a lot about money through observation, chiefly your spending behaviours, decisions and conversations.<\/p>\n

If they see you making impulsive purchases or not considering the price of a particular product, they may struggle with developing their own good spending habits later in life.<\/p>\n

It\u2019s up to you to be proactive. When you\u2019re out shopping, try saying things like: \u2018I don\u2019t think we really need this\u2019, or \u2018The price is a little high, I might see if I can find it cheaper somewhere else\u2019.<\/p>\n

In other words, find opportunities to teach them to compare one product to another, as well as the difference between the cost of a particular product and the value of the product.<\/p>\n

The workings and benefits of a bank account<\/h3>\n

Kids love piggy banks. And while using one is a great way to kick things off, managing money wisely requires more sophisticated tools in the real world.<\/p>\n

The whole experience of going into a bank with your child and\u00a0opening an account<\/a>\u00a0can have a huge impact. You can talk them through depositing and withdrawing money \u2013 and the channels they can use to transact their money.<\/p>\n

The same goes for taking them into a branch and depositing their pocket money, transferring it via\u00a0Internet Banking<\/a>\u00a0and\u00a0NAB app<\/a>, or getting them to check their account balance.<\/p>\n

Next time you pay a bill online or via your smartphone, involve your child and show them how the money gets debited from the balance.<\/p>\n

This will help them to understand terms such as like debit, credit, balance, transactions, and ATM. Chances are they\u2019ll find the whole process fascinating.<\/p>\n

Budgeting and saving<\/h3>\n

You should also consider putting your child in charge of their own money early on (with guidance of course). This can be a fantastic way to teach them the importance of budgeting and saving. Let\u2019s break it down.<\/p>\n

Budgeting<\/strong><\/p>\n

Say the school holidays are coming up and your child\u2019s friends are planning an outing on one of the days.<\/p>\n

You could help them estimate the total cost of the excursion and how much spending money they\u2019ll need on the day. Then, start budgeting for it out of their weekly pocket money in the lead-up to the holidays.<\/p>\n

Saving<\/strong><\/p>\n

Chat about how a\u00a0savings account<\/a>\u00a0can help your child reach their goals faster \u2013 showing them the importance of separating their \u2018savings\u2019 from their regular transactions.<\/p>\n

They can also name their savings account according to what they\u2019re saving for, and you can help them set up automatic transfers to their savings account so they can put money away regularly.<\/p>\n

While your child may find the process frustrating and slow, it\u2019s important that they understand the value of money. It\u2019s a good idea to come up with creative ways for your children to earn some extra cash, instead of \u2018topping up\u2019 their account.<\/p>\n

Term deposits<\/strong><\/p>\n

You can also teach them the value of not touching their savings and watching it grow over time with a\u00a0term deposit<\/a>. They can choose a term which suits their needs and earn interest by locking away their money for that time.<\/p>\n

Keep in mind that you need to be 18 to have a term deposit, so if your child is a minor this isn\u2019t an account you can put in their name.<\/p>\n

Safety and security<\/h3>\n

In the digital age, protecting your identity has never been more important. When it comes to banking, it\u2019s critical that you educate your child around the purpose of their PIN and password, and how best to protect them.<\/p>\n

In terms of safety and security, there are a number of themes you should sit down and discuss with your child, just to help them get their head around everything. Here are some ideas to get you started:<\/p>\n

Keeping your children safe online<\/a><\/p>\n

Protecting your password<\/a><\/p>\n

Keeping your mobile devices and apps secure<\/a><\/p>\n

Protecting your identity online<\/a><\/p>\n

Identifying spam and phishing messages<\/a><\/p>\n

Shopping securely online<\/a><\/p>\n

Protecting your computer from malware<\/a><\/p>\n

Debit cards versus credit cards<\/h3>\n

As your child gets older, it\u2019s important they understand the similarities and differences between debit cards and credit cards.<\/p>\n

Debit cards<\/strong><\/p>\n

A\u00a0debit card<\/a>\u00a0allows you to access the funds that you have available in your everyday banking transaction account \u2013 such as a\u00a0NAB Classic Banking account<\/a>.\u00a0It can be used at ATMs and EFTPOS terminals.<\/p>\n

If your debit card is a \u2018scheme\u2019 debit card \u2013 such as a Visa Debit card or MasterCard Debit card \u2013 they can usually be used for online purchases as well as at ATMs around the world.<\/p>\n

Credit cards<\/strong><\/p>\n

A\u00a0credit card<\/a>\u00a0can also be used at ATMs, EFTPOS terminals and online. But as you know, they don\u2019t draw on money sitting in your everyday bank account.<\/p>\n

For your kids, the most important lesson here is that when you\u2019re using a credit card, you\u2019re borrowing money from the bank. This means you can accumulate too much debt if you\u2019re not careful.<\/p>\n

They need to understand that you have to pay the money back, as well as any interest and fees \u2013 such as annual fees or cash advance fees.<\/p>\n

How can I open a nab bank account for my child?<\/h3>\n

You can open the following accounts for your child.<\/p>\n