But, a recent YouGov survey of over 2,000 parents, guardians and caregivers of children aged 8-17 found that 42% of parents actively avoid discussions with their children on financial topics because of limited knowledge. Additionally, over half of parents claim their children's attitudes to money need to improve. In order to walk the walk, kids need to learn to talk the talk. There are an endless amount of complicated financial terms and acronyms they will stumble upon, but let’s begin with the basics:
- Budget: Simply put, a budget is a plan for how to spend your money. It involves setting limits on how much you can spend on different things, like food, clothing, and entertainment. Emphasise the importance of creating a budget and sticking to it.
- Savings: Savings refers to the money you set aside for future use. It's important to teach your kids the value of saving money, whether it's for a specific goal, like buying a new toy or going on a vacation, or just for a rainy day.
- Interest: Interest is the amount of money you earn on your savings. Teach your kids the concept of interest by explaining that when they save money in a bank account, they earn interest on that money.
- Debt: Debt is money that you owe to someone else. Explain to your kids that borrowing money can be helpful in some situations, like buying a house or going to college, but it's important to have a plan for paying back the money you borrow.
- Credit Score: A credit score is a number that reflects how well you have managed credit or debt in the past. It's important to teach your kids about credit scores, as it can impact their ability to get a loan or credit card in the future.
- Investment: An investment is something you buy with the hope that it will increase in value over time. Teach your kids about investments, like stocks or real estate, and explain that while they can be risky, they can also be a good way to grow their
money over time. - Taxes: Taxes are money that you pay to the government. Teach your kids about taxes, why they are important, and how they are used to fund things like schools, roads, and public services like Medicare.
- Inflation: Inflation is the rate at which prices increase over time. Teach your kids about inflation and how it can impact the value of money over time.
By teaching your kids basic financial lingo, you can help them develop important money management skills that will serve them well as they grow up. Remember to explain these concepts in a way that they can understand, and encourage them to ask questions and learn more about finances.
Kids learn by doing, so consider introducing your kid to earning, saving, and spending in real life as soon as they are ready. Kit can help you navigate your little grownup’s journey to financial capability, sign up to Kit today.
Consider the PDS, FSG, TMD and other important information at heykit.com.au/legal. Any advice given is general in nature and does not take into account your objectives, financial situation or needs so please consider whether it is appropriate for you.