Today’s kids – whether they fall into the Millennial or even younger generation age brackets, are broadly perceived as being the ‘have it all right now’ generation.
“They have been brought up like heroin addicts with devices constantly pinging with stimulation, feeding their addiction,” social analyst David Chalke said in a recent article in The Courier Mail. “They have been hardened by the world of social media and ‘stuff’.
“When previous generations were growing up there was nothing offensive on TV before 9pm, nasty subjects like suicide were not talked about on the radio so kids could be protected from the more unpleasant side of life for longer.”
Instead, the internet and social media now ensure – rightly or wrongly – that today’s children are exposed to new products, fads, trends, breaking news and other world events, faster than each generation that preceded them.
This relentless exposure to what other people have and what other people are doing means a bunch of young people suffer severe FOMO – the jokey but sadly serious acronym for ‘fear of missing out’. This, combined with advancements in banking technology that make it easier for people to access money (their own and that they’ve borrowed), can set today’s youngsters up for a world of financial hurt if they aren’t taught how to handle their finances from an early age.
As Rob Lockhart, a financial educator at Westpac, points out, when Baby Boomers were growing up and leaving school, credit was not readily obtainable – in fact, Bankcard, the first shared brand credit card, only hit the Aussie market in 1974. Back then, the range of banking products and services available today simply did not exist.
“Baby Boomers had to save up for things,” Lockhart says. “These days, it’s a lot easier for young adults to get credit via credit cards. Also, it’s so much easier to transact now, particularly with Tap and Go, for example.
“I think all of those things are combining to make it easier for people to spend their money. And if they haven’t developed good habits when they’re young, it can lead them to trouble.”
Today’s parents are clearly concerned about this issue too. Research by Westpac found that nearly three quarters of parents were worried their child was not equipped with the right financial know-how to enter the ‘real world’ when they left school. The research also found that 71 per cent of Aussies worry that they are making bad financial decisions.
Part of the problem, Lockhart says, is people’s unwillingness to talk about money at home.
“I think in my parent’s time, people were a lot more private about their personal and financial situations and that quite often spilled over into the family,” he says.
“But nowadays, I think it really gets down to our perception about ourselves. We don’t talk about money because we don’t want to appear to be greedy. Or we don’t want to appear that we actually have to worry about money, that we don’t have enough.
“So, there’s a whole lot of perceptions about what we think other people might think of us. And I guess all those beliefs get passed down on to our kids and grandkids.”
That’s why he says it’s important to be open with children – and grandchildren – about how we make our own decisions about spending money.
“For example, when we’re at the supermarket, we could discuss why we’re comparing the prices between things, because we want to understand the true value of what these things are,” Lockhart says.
“We have to involve our children when we’re budgeting for things – for example, saving up our money for our next holiday or car, or even saving money to buy Christmas presents.”
Linking the need to work with discussions about money is also a helpful way of explaining its value to youngsters. Pointing out, for example, the reason that mum or dad or grandma and grandpa aren’t there for the day is because they’re out earning money. Similarly, giving kids pocket money for doing small chores around the home is a part of building up that connection to the value of money, Lockhart says.
Helping kids set savings goals is another way of teaching them to form sound habits at a young age. Westpac’s Bump Savings account was designed with this goal-setting feature in mind, Lockhart says.
The Bump product helps simplify the account opening process, by allowing both the child and parent or guardian to be a signatory on the account until the child is 12. Once the child turns 12, they can choose to take control of the account, although the parent or guardian can continue to monitor their usage.
“A feature of the Bump Account is that it has a section where the child can put in their savings goals,” Lockhart explains. “They can call their goal whatever they’d like, put in how much it’s going to be and put in the date they think they’re going to be able to buy it.
“That’s a big part of teaching kids about savings – helping them to understand, what is that goal they’re going for? What do they have to do to get there?” Lockhart added. “Going in regularly and checking their progress and keeping their goal top of mind – because that’s how you teach your children about saving.
“If you can get children to save, then it sets them up for life, for everything else.”
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