Financial literacy: Take home tips for the kids

Just uttering the words ‘avocado’ and ‘property market’ in the same sentence is sure to get eyes rolling these days. Thanks to demographer and commentator Bernard Salt, the humble avocado – once just a fruit – has become a symbol of how the younger generation and their spending habits are perceived.

While it’s acknowledged that today’s 20 and 30-somethings enjoy spending their money over the coffee counter and enjoy access to global opportunities completely inaccessible to other generations, they also face a unique set of financial challenges which they are largely poorly equipped.

In 2018, young people face extremely high housing costs, with several of Australia’s major cities identified as “unaffordable”. International data on housing affordability by Demographia[1], ranked Sydney and Melbourne in the Top 10 “least affordable” cities. Adelaide, Perth and Brisbane were noted as “severely unaffordable”. To put this in context, the average cost of a house in Sydney during the 1970s was $28,000. That’s compared with more than $1.12 million in 2017, according to Domain[2].

At Trilogy, we recently undertook our own research and confirmed what was suspected. One in five Australian teenagers do not appear to have a basic level of financial literacy. They simply aren’t aware of how to budget or strategies for saving versus spending.

Further to this, we found that most young Australians believe they’ll never get a foot on the property ladder, and nearly one-third of all independent young adults will return to live with their parents before turning 35, predominantly due to financial reasons. That’s scary stuff, especially if you’re Mum and Dad.

It’s no secret that the Silent Generation (those born between 1925 – 1945) lived through some tough financial times. They worked hard and earnt their way. This generation delivered Paul Keating and John Howard, two Prime Ministers who both made significant changes to Australia’s financial landscape. Between them, they deregulated the financial sector and introduced our national retirement savings scheme – compulsory superannuation.

The next generation, the Baby Boomers, challenged the conservatism of their parents. Really, they were the original ‘troubled teenagers’. They were wild, but financially not as silly as they seemed. They benefited from the financial lessons of their parents who taught them how to save for a rainy day, live within their means and manage their money. Supported by sweeping institutional reforms within the financial sector, high employment prospects, free tertiary education and real estate opportunities which we can only dream about today, this generation flourished financially, not withstanding periods of economic uncertainty delivering high interest rates and economic recessions.

Most Gen X and Ys (those born after 1965) watched their Baby Boomer parents pay off their mortgages, re-invest in the property market, build wealth, and travel abroad. Young people today, have been sheltered from rising standard of living costs, due to the financial comfort delivered by their parents. They’ve enjoyed adolescent years fuelled by global consumerism, advertising and technological advancements. This environment, in a lot of cases, has left them completely unprepared to independently manage the financial challenges and complexities they face.

Improving financial literacy starts at home and it must start early. If you’re looking for ways to ensure your kids are equipped with the financial literacy they need to overcome their own financial hurdles and achieve their goals, check out our take-home tips:

Under 10s

These youngsters should only pocket cold, hard cash when they earn it, perhaps by doing chores around the house, feeding the pets or helping with the gardening.

Once they’ve earned it, consider encouraging your children to divide their earnings three ways – save, spend and donate.

Between 10 and 18

Kids really learn the joy of spending money during this time. They grow in self-confidence and independence and they may have a part-time job. They will certainly have a mobile phone and later, they are likely to be dreaming of, if not already looking at buying their first car.

During this time, young people should:

  • Learn to budget e.g. checking pay slips, bank statements and week-to-week budgeting
  • Be introduced gradually to the idea of being responsible for their own expenses e.g. paying their phone bill
  • Understand the importance of saving for emergencies
  • Practice living within their means.

Another topic to educate your youngsters on is the idea of credit, particularly the advantages and disadvantages of obtaining a credit card. Credit card debt can and has been seen to, cripple many Australians. Early education about the risks of easy credit should be an essential life lesson.

With a solid financial education, young people can go on to build their own financial knowledge and one day successfully approach and navigate the property market.

For more on Financial Literacy, check out why financial education trumps winning the lottery or having rich parents.

[1] 13th Annual Demographia International Housing Affordability Survey


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