One of the big thrills of high school is learning through experimentation - particularly when you get to find out that potassium is flammable by making it explode during science! While schools do a great job of teaching kids all about the world we live in, unfortunately, the majority of them don't teach is financial literacy.
And it shows! Kids and money make for an explosive combination unless you teach them how to handle it safely.
A report released by the National Youth Affairs Research Scheme revealed that 26 per cent of kids between the ages of 12 and 17 were currently in debt and 55 per cent had been in debt in the past, so while your kids may be fairly safe in the school science labs, conducting financial experiments in the real world can be much more dangerous.
For under 18s, mobile phones are the biggest source of debt.
According to the NSW Office of Fair Trading 50 per cent of young teens with debts identified their mobiles as being the culprit.
But that all changes the moment they turn 18 and start being courted by credit card providers.
About 59 per cent of 18 to 24 year olds said easily available credit was the source of their money woes. So if there's a valuable lesson you can teach your older teenagers, it's how to keep their credit card bills under control. The simplest option might be just to advise your kids not to apply for a card in the first place, but the world has changed and credit cards are the only way to make some online purchases (mainly the ones that your kids are going to want to spend their money on, such as music, movies and concert tickets).
Fortunately, there is another option - debit cards have many of the same features as credit cards but will only allow them to access money they already have in their account, so there's a limit to how much trouble they can get into.
Debit cards are a great way to start teaching a young person the basics of budgeting and good money management without the risk of getting stung by the high-interest repayments of a traditional credit card.
If your kids aren't spending all their money paying off credit card bills, what should they be doing with it? Saving of course! But you have to teach them how.
Studies done by the National Bureau for Economic Research have shown that people who were taught about personal finance as children save an average of about five per cent more than those who weren't - this may not sound like a lot, but it can make a big difference over time.
A good foundation is vital to developing good saving habits and starting young is the key.
When you're teaching your kids, make money fun and make sure that the lessons are appropriate to their age.
Small children are concrete thinkers - they need to be able to see and touch things to understand them - so it's a good idea to start out with a piggy bank.
When they put their pocket money in it they'll be able to feel it get heavier as their savings grow. Older kids might benefit from having a savings account, and visiting the bank with them to make regular deposits, helping them read their statements and eventually introducing them to the responsibilities of having their own keycard are great ways to teach them good money habits.
Getting a good financial education is the key to developing sound habits for life.
In 2009 the Reserve Bank reported that 61 per cent of Australian households are in debt - a 25 per cent jump since 1989! No parent wants to see their kids in financial trouble, and teaching children how to manage their money early can help them avoid making the sort of errors that lead to getting into debt.
Schools are great at teaching a lot of things, but for the moment you're pretty much on your own when it comes to teaching your kids about finance and money management. But with a bit of guidance your kids will learn to handle their finances as responsibly as they do the chemicals in the science lab.
And with you watching over them, they probably won't get their fingers burned.
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