Financial literacy is the knack for making savvy money choices in daily life, covering everything from saving and investing to spending, earning, and borrowing like a pro. It’s about getting your head around tricky concepts like interest, inflation, and risk, plus knowing your way around tools like bank accounts, credit cards, and loans. Teaching your kids these skills isn’t just a nice-to-have—it’s a ripper way to set them up to steer their financial future, make cracking decisions, and dodge the usual money traps to stay financially secure.

Why Financial Literacy’s a Big Deal for Kids

“Handling cash well takes a proper set of skills, from basic sums to budgeting, understanding how interest ticks, and keeping your cool to avoid blowing your dosh,” says Louise Hill, Co-founder and CEO of GoHenry. “CBI Economics research, backed by GoHenry and Wilson Wright, shows financial literacy can boost early-career earnings by up to 28%, and kids with money smarts are more likely to launch their own biz.”

A Cambridge University study backs this up, finding that money habits are locked in by age seven. That’s right—those core behaviours shaping how your kids will handle cash as adults are forming while they’re still in primary school. Sam Sims, Chief Executive of National Numeracy, chimes in: “Feeling comfy with numbers is a must-have skill, especially for managing your money. Whether it’s paying bills, comparing supermarket prices, or saving for a holiday, confidence with numbers keeps you in the driver’s seat.”

Even though financial literacy’s been on the secondary school curriculum since 2014, there’s still a massive gap. A London Institute of Banking and Finance study found 82% of young Aussies want to learn more about money, keen to get the lowdown on mortgages, pensions, loans, credit cards, budgeting, debt, and even tax.

Why Schools Need to Step Up

We’re living in a world where money matters are getting more complex by the day, making financial literacy for kids a non-negotiable. A solid financial education gives kids the tools to plan for their future, stay in the black, and avoid drowning in debt later on. Stewart Perry, Director of the Centre for Financial Capability, puts it bluntly: “To tackle the national money skills crisis, we’ve got to give kids and teens the chance to build financial know-how through proper education. Schools are a cracking way to boost kids’ money confidence and resilience, helping them face economic rough patches down the track.”

Kids who’ve had financial education at school are more likely to be money-savvy, yet only 4 in 10 say they’ve had any at all. Schools want to do more, but packed timetables and a lack of teacher know-how often hold them back. It’s a fair dinkum challenge, but one we need to tackle to set our young mates up for success.

How to Yarn with Kids About Money

Talking about financial literacy doesn’t have to be a heavy slog. The trick is to make money chats part of everyday life, with plenty of chances for kids to put what they learn into action. “Research from the Consumer Financial Protection Bureau shows kids start picking up money values, skills, and attitudes in early childhood,” says Louise Hill. “They also learn to plan ahead and grasp delayed gratification. Giving them pocket money lets them practice these skills, building the foundation for adult financial capability.”

Start simple—chat about money when you’re grabbing groceries, paying at a café, or pulling cash from an ATM. These yarns help kids piece together what financial literacy looks like in the real world. For teens, level up by diving into trickier topics like borrowing, credit scores, loans, and the stock market. Tie these chats to news stories, school lessons, or their big life goals to keep it relevant.

The Bonza Benefits of Early Financial Literacy

GoHenry’s recent research shows teaching kids financial literacy can make them £70,000 richer in retirement—now that’s a game-changer! “Financial literacy opens doors to a bright future,” says Louise Hill. “It brings benefits for kids, society, and workplaces—we just need to arm young Aussies with the right tools and knowledge.”

Here’s why starting young pays off:

• Financial Independence: Kids learn to stand on their own two feet, relying less on others for cash support.
• Better Choices: They make informed calls on spending, saving, investing, and borrowing, leading to stronger financial outcomes.
• Debt Smarts: Understanding interest rates, loan terms, and credit scores helps them dodge debt traps.
• Wealth Building: Savvy investment choices, like saving for retirement, help them grow their wealth over time.
• Security and Peace: Financial know-how gives kids the confidence to handle unexpected challenges and plan ahead.
• Scam Protection: They’re less likely to fall for dodgy scams, predatory loans, or other financial pitfalls.
• Responsibility: Learning money management early instils accountability, fostering lifelong good habits.
• Empowerment: Financial literacy lets kids take charge of their future, chase their dreams, and live life their way.

Key Bits of Financial Literacy

At GoHenry, we reckon financial literacy boils down to six core areas: earn, spend, save, invest, borrow, and protect.

Spend

Spending’s a biggie, packing in skills like understanding money’s value, knowing where it comes from, and budgeting to make it last. Parenting expert Tanith Carey says, “Learning to prioritise spending is a life skill. It’s about sorting ‘needs’ from ‘wants’—the foundation of all financial decisions. ‘Wants’ can lead to overspending if you’re not clued up.” Help kids spot the difference when they’re eyeing that new toy or gadget, and talk about what drives their urge to splurge.

Save

Saving’s more than chucking coins in a jar—it’s about knowing why you’re doing it. Short-term goals (like a new game) or long-term dreams (like uni fees) give saving purpose. Show kids how to set up savings accounts and delay gratification. Financial coach Simonne Gnessen adds, “Kids need to see saving as a gift to their future selves. Framing it this way makes it stick.”

Earn

Earning gives kids hands-on experience with money. Whether it’s pocket money or a summer job, they learn its value through their own efforts. Louise Hill notes, “With 75% of kids saying financial education will help their future careers, empowering them to earn early can boost equality and job opportunities.” Explain payslips, taxes, and deductions to round out their know-how.

Borrow

Understanding borrowing—interest, loans, repayments, and credit scores—keeps kids from racking up debt as adults. Start by explaining what credit is and why people borrow, then show how a good credit history sets them up for big purchases like a car or house.

Invest

Investing can grow wealth, and kids need to get the basics. Teach them about tax-free options, stocks, shares, and the stock market. Even simple chats about long-term investing can spark their interest in building a nest egg.

Protect

Protecting money is crucial in a digital world. Clinical psychologist Linda Blair warns, “Kids fall for scams not because they’re gullible, but due to weak impulse control. Parents need to teach them to pause and think.” Cover online safety, strong passwords, and spotting dodgy deals to keep their cash secure.

Fun Ways to Build Financial Smarts

It’s never too early to start, says Dr David Whitebread from the Cambridge study: “Parents who help kids plan ahead, reflect, and regulate emotions can spark cracking financial habits.” Here’s how:

• Pocket Money: Regular pocket money, like through GoHenry’s prepaid debit card, gives kids freedom to spend and save, learning as they go.
• Financial Apps: GoHenry’s Money Missions offers videos, quizzes, and badges to make learning about money fun and engaging.
• Budgeting Practice: Teach kids to budget their pocket money, helping them build habits for adulthood.
• Savings Goals: Set short-, mid-, and long-term savings pots to show the perks of saving and keep them motivated.
• Digital Spending: With 81% of transactions in 2020 using cards (per the British Retail Consortium), teaching kids to navigate digital payments is key.
• Summer Jobs: Encourage teens to get jobs—GoHenry’s 2022 Youth Economy Report shows kids are hustling with gigs like babysitting or online businesses.
• Chores for Cash: For younger kids, paying for chores builds an early grasp of earning and saving.

Avoiding Common Money Stuff-Ups

Teaching kids about financial pitfalls sets them up for success:

• Overspending: Show them how to live within their means and prioritise needs over wants.
• Skipping Savings: Stress the value of saving for emergencies, goals, and retirement.
• Ignoring Debt: Explain the cost of borrowing and the risks of high debt.
• Not Getting Interest: Teach how interest impacts loans and savings.
• No Financial Plan: Encourage setting goals and planning to stay on track.
• Misunderstanding Products: Warn about the risks of financial products like credit cards or loans if terms aren’t clear.

Cracking Resources for Financial Literacy

From board games to kid-friendly videos, the right resources make financial literacy stick. GoHenry’s Money Missions, books like What’s My Child Thinking by Tanith Carey, and free online tools can bring money lessons to life in a way that’s fun and memorable.

Key Money Terms to Teach

• Budget: A plan to manage income and expenses, teaching kids to prioritise spending.
• Savings: Money set aside for future needs or goals, like emergencies or big purchases.
• Interest: The cost of borrowing or earnings from savings/investments.
• Credit: Borrowing with a promise to repay, requiring good management to maintain creditworthiness.
• Debt: Money owed, often with interest, which can spiral if mismanaged.
• Income: Earnings from jobs, allowances, or investments, teaching responsible management.
• Compound Interest: Interest earned on both principal and previous interest, showing the power of early saving.
• Inflation: Rising prices that reduce money’s value, impacting long-term planning.
• Credit Score: A number reflecting credit history, affecting loan approvals.
• Financial Risk: The chance of losing money, a key concept in investing.

How GoHenry Helps

GoHenry’s prepaid debit card for kids aged six and up is a top tool for practicing financial literacy. From spending and saving to budgeting and learning money’s value, kids get real-world experience with their own cash. It’s a hands-on way to build confidence and capability, setting them up for a financially savvy future.

Conclusion

Financial literacy for kids is a game-changer, equipping young Aussies with the skills to navigate a tricky money world. From boosting retirement savings by £70,000 to fostering independence and dodging scams, early money smarts pay off big. By weaving money chats into daily life, using tools like GoHenry, and teaching key concepts like budgeting and investing, you’re giving your kids a head start.

FAQs

Why’s Financial Literacy Crucial for Kids?
It builds independence, sharpens decisions, and helps dodge debt and scams.

How Do I Teach Kids About Money?
Make it part of daily yarns, use pocket money, and tie lessons to real life.

What Age Should Kids Start Learning?
As early as seven—habits form young, per Cambridge research.

What Are Key Financial Skills?
Earning, spending, saving, investing, borrowing, and protecting money.

How Can Schools Help?
Add robust financial education to curriculums to boost money confidence.

What’s GoHenry’s Role?
Its debit card and Money Missions give kids hands-on practice with money.

How Do I Avoid Money Mistakes?
Teach kids to budget, save, and understand debt and interest.

Why Focus on Digital Money?
With 81% of transactions digital, kids need to learn online spending.

What Resources Are Out There?
GoHenry’s app, books, and games make learning fun and sticky.

How Does It Impact the Future?
Financially literate kids earn more, start businesses, and retire richer.