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With the ubiquity of more convenient methods of payment than notes and coins, cash is no longer king. So how do we teach kids the value of money when they don’t frequently see it? The answer could be to focus on what they hear instead.

We have increasingly lighter pockets

Paying for things is only getting quicker and easier. From the tap of a phone to the wave of a watch, we barely need to pause before or after a purchase anymore. Our currency these days is more likely to be invisible than physical.

Currently, more than two in five Australians don’t even have cash on hand. This is a big jump from just two years ago when only one in three weren’t carrying cash.

Convenience: A double-edged sword

This can be problematic for children, leading not only to a lack of understanding of the value of currency, but even an inability to connect ‘paying’ with ‘spending’. Coming out of childhood with no meaningful concept of money can be bad news for an adult.


So how do we, as parents and grandparents, overcome the double-edged sword of digital convenience to impart the value of money onto future generations?

Passing the knowledge down

Even as financial considerations become ever more complex and abstract, there are ways to teach financial literacy. It just takes some intention. Children learn by observing, so if they can see us making thoughtful choices around spending, we can get them on the right track.

Some primary schools are now teaching kids about what physical money is and how it works. How long until that’s happening in a history class?

Of course, money still exists, and a time-honoured way to teach kids about finance is giving a cash allowance. It’s a particularly good tactic for older children, but not as effective for young kids who learn through observation, instruction and practice1.


Family values and the value of a dollar

Research shows children’s lifelong money-related patterns are largely established by the age of seven2. Younger kids won’t necessarily grasp the concepts, but they develop an understanding of why we’re doing what we’re doing, and how it’s beneficial to us.

Think about your own attitude towards money and where it came from. If you’re now a parent or caregiver to young children, it might be wise to think about how money plays into your family value system, and how to incorporate the values into your daily life.

Talking tactics

If kids don’t see you using money on a regular basis, the next best thing is to hear about it. Let them observe positive and thoughtful conversations about money around the dinner table or in the shops.

The supermarket can be a learning experience. While you’re shopping, talk about the purchasing choices you’re making. Point out specials, or explain you’re choosing a the less expensive product so you can do more with the money you’ve saved.

Talk like you’re financially in charge. There’s more power in saying you won’t buy an item because it’s not a priority than saying it’s because you can’t afford it.

Discuss financial transaction and decisions in real time. Show kids you’re making considered choices, whether it’s looking for a good price, sacrificing this for that, or saving money for something special.

Model smart financial choices, such as saving for a child’s education with an Education Bond. They’re tax-effective, with tax paid on your behalf at a rate of up to 30%, which may be lower than your marginal tax rate. Extra benefits apply for education-related withdrawals, but tax breaks apply no matter what the savings are used for.

Of course, table talk about smart investing may be a bit complex for a child to understand, but they’ll likely pick up on the positive vibe.

We can help

At Futurity, we know how important education is. It’s what we’re about. Our Insights blog is packed full of articles that could springboard positive financial conversations.

In practical terms, our Education Bonds are smart, tax-effective investment vehicles that are well worth talking about. And as the children grow, they could enjoy watching the balance grow, too. Another wrung up the financial literacy ladder.

To learn more about how our solutions could benefit you and your loved one, speak with your financial adviser about the Futurity Education Bond range. Or get in touch with us.

1. Rettig and Mortenson (1986).

2. Holden, Kalish, Scheinholtz, Dietrich and Novak, (2009); Lau (1998); Roos et al. (2005).