The next generation could be better than us at handling money

Data from Kit, a new money app for children developed by the Commonwealth Bank, shows that under-18s are really engaged with money.

Not only do 80% of 6-18 year olds chat with mum or dad about money, close to seven out of ten (64%) have strategies in place when they go shopping. These youngsters ask themselves: “Do I want it? Do I need it? Should I wait until it is on sale?”, which is a lot more than many adults do.

Other results show over one in two children earn money on their own, with 74% of kids saving their money, indicating an ability to plan for the future.

These findings all back the view that future generations could be pretty savvy about how they handle money.

Adult financial literacy is going backwards

Now I know a lot of people would say these are all basic steps they were taught as children, and it all sounds pretty normal. If that sounds like you, fantastic. But we have a real problem in Australia, where financial literacy is not part of the national curriculum. So not all kids are getting a fair go at learning how to save and be sensible with money.

I’m also a big believer that if you think your kids are bad with money, take a look at yourself. Children pick up many of their basic habits and attitudes to money from their parents; it’s often a case of monkey see, monkey do.  Yet many Australian adults have poor financial literacy skills themselves.

The latest HILDA survey^[1] found adults can struggle to answer basic questions about money. Even worse, financial literacy among over-18s has gone backwards across every age group since 2016.

The HLDA report didn’t elaborate on why we’re getting worse, not better, when it comes to grasping personal finances. But the reality is that even with the best of intentions, some parents simply don’t have the skills to nurture good money habits in their children.

Fortunately, there are some great resources available to help parents teach kids about money.

Obviously apps can be a handy starting point, and along with Kit, others choices built with kids in mind include ZAAP and the Spriggy pocket money app. Or maybe have a chat with your child’s school about introducing financial literacy programs designed for children, like Banqer or Talk Money developed by the Ecstra Foundation (of which I’m a director).

Now…time to test how you rate

So, how does your own financial literacy stack up?

Research by comparison site Canstar (of which I am Editor-at-Large) shows 60% of Australians consider themselves to be financially literate. But when put to the test, 46% failed Canstar’s new TestMyMoneyIQ quiz that assesses knowledge of basic financial concepts.

To see how your financial knowledge stacks up, here are the four questions from Canstar’s quiz that proved most challenging. Among 1,000 adults, less than 25% picked the right answers.

The correct answers are at the bottom of this page (no cheating!).