Yish Koh, managing director of Kit, a new Commonwealth Bank-supported money app that aims to revolutionise how kids earn, save, spend, and manage money in the digital economy, has highlighted the importance of supporting the financial literacy taught in schools with experiential learning.
Recent YouGov research revealed that most parents think the most effective way to teach kids about money is through standardised lessons at school (61%). But it is through real-world experience that kids build financial skills and capability, experts said.
In an interview with the Happy Families podcast, Koh said parents are struggling with where to start when it comes to navigating the topic of money with their kids in the digital world.
“Our survey research of over 2,000 parents of children aged 8-17 in Australia shows that about half (48%) are actively avoiding having conversations with their kids about money, and more than half (55%) find it difficult linking chores to pocket money in the digital age,” she said.
The same research revealed that 55% of parents with children aged 8-17 in Australia teach their children about money based on their own knowledge, but 86% of them said they could use help from other sources.
“It’s not surprising when you think about it [that] kid’s experience with money is very different today to what their parents’ experience of money was growing up,” Koh said. “The world is increasingly online and cashless and children are bombarded with in-app purchases, gaming related offers, and crafted enticements on a daily basis.”
Koh also said it is the non-tangible nature of the digital world that makes it challenging for children to build financial capability.
“As opposed to having cash, money is ‘invisible’ meaning they may struggle to create the connection between purchasing something and that being charged back to their parents’ accounts,” she said. “When cash was more commonplace, they were most likely given an allowance – meaning they could make informed decisions about how it’s spent, and actually see the remaining funds decrease. Nowadays, children are also exposed to extremely sophisticated marketing and purchasing tactics – usually embedded within the apps while they’re playing, such as ‘exchange rates’ that obscure the real value of money, limited time sales that encourage urgency, and loot boxes which encourages them to gamble to win variable rewards.”
There are solutions available, however, Koh said, including books, blogs, and government websites like Money Smart that provide lots of tips for parents, games that help to teach kids about financial concepts, as well as digital education tools and apps that focus on financial education.