Financial literacy focuses on knowledge and understanding of financial concepts, but it’s been shown that differences in financial knowledge account for only 1.8% of the variance in financial behaviours¹. Financial capability is a broader term that encompasses not just financial knowledge, but also skills, attitudes, and confidence that can lead to positive financial behaviours².
At Kit, we know that parents and carers play a critical role in helping kids acquire money skills, attitudes and confidence by giving them opportunities to ‘learn by doing’, and role-modelling positive attitudes and habits.
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.
We commissioned Ernst & Young, Australia (EY Australia) to construct an evidence-based framework describing children’s financial capability outcomes. We chose to focus our product on four of these, which tie to the core features of our app and the ones we are in the best position to shift:
- Learn it: Talk about money
- Earn it: Safely and productively participate in the ‘earning’ economy
- Stack it: Plan for the future
- Spend it: Be informed, empowered and conscious when spending money
These four outcomes also work together – when kids learn about money, they know that they can earn money through completing chores and jobs, but also that with money they’ve earned they have the choice to save it in a Stack or put it on their Kit Card to spend. This mimics the choices that we adults make when we earn our income (and is also why we’ve called our Earn function ‘PayDay’).
When we launched Kit in beta, we committed publicly to measuring and reporting on our impact on children’s financial capability. And that’s what we’ve now done, with the Kit Money Matters Report. We engaged with the Behavioural Insights Team to analyse the performance of our beta product.
It shows that families who use Kit, compared to a control group (and controlling for characteristics such as education, income, location and number of children) were:
- 14.2% more likely to be earning money (e.g., through chores)
- Having 8.4% more conversations about money with their parents or carers
- 7.8% more likely to save their own money
- 4.6% more likely to apply spending strategies when purchasing.
Despite being early days for Kit, we’re delighted with these results, and determined to continue to do all we can to continue to drive the financial capability of young people in Australia.
1 Fernandes, D., Lynch Jr, J.G., and Netemeyer, R.G., “Financial literacy, financial education, and downstream financial behaviors”, Management Science, 2014, 60(8), pp. 1861-1883.
2 National Financial Capability Strategy 2022 https://www.financialcapability.gov.au/strategy/part2
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.