Children and young people are financially active from a young age. It is important schools, families and the wider community work together to support them to develop a range of financial capabilities.

What financial literacy involves

Financial literacy is having the capabilities (knowledge, skills, attitudes and confidence) to make financial decisions that best suit an individual’s situation. These combined capabilities support:

• vigilance – keeping an eye on money going in and out of credit and debit bank accounts
• management – using debit and credit tools and strategies, for example Afterpay
• planning – setting and working towards short- and long-term financial goals.

Find out more about the importance of financial capabilities in the National Financial Capability Strategy 2022.

Why financial literacy is important

Children and young people are growing up in a very different world to their teachers and parents.

Changes in technology

Financial technology is changing the way we transact and manage money in our everyday lives. Money transactions are often invisible and cashless. This exposes children and young people to complex challenges such as scams, fraudulent transactions, social influences, gambling opportunities and other risk-taking activities.

We must ensure children and young people’s financial wellbeing by supporting them to safely and securely manage their money online and via apps. For example, tap-and-go, streamed music, online games and shopping, mobile banking and government services.

Navigating ‘financial firsts’

Financial literacy helps young people to navigate a series of ‘financial firsts’. These include:

• getting a job and receiving their first pay
• opening a bank account
• saving and spending money
• writing a budget
• donating or investing money
• getting a debit card
• making regular payments, for example, a mobile phone plan
• learning about superannuation
• filing a tax return
• making a significant commitment like buying a car.

The Money Managed website supports young people and their parents to make smart financial decisions with practical information, tips and tools.

Young people’s financial journey

• 0 to 4 years – young children are understanding money in their day-to-day life.
• 5 to 12 years – children are learning about money in school and talking with their family, teachers and friends about money.
• 13 to 17 years – teenagers are making independent financial decisions.
• 18 to 24 years – young adults are using a range of financial products and services.

Find out more about young people and their money journey on the Moneysmart website.

What the research says

Family values and attitudes towards money impact children.

• 82% of young people said their understanding of financial concepts comes from conversations with parents and carers.
• Students who received information about money management from their parents were up to three-quarters of a year ahead in their financial literacy learning (PISA 2018).
• Children can develop their spending and saving habits by 5 years old (World Economic Forum 2018).
• Up to 87% of students reported talking to their parents about their own spending and savings decisions or things they wanted to buy at least once a month (PISA 2018).