What Is Financial Literacy? Financial literacy refers to a person’s ability to understand and effectively use various financial skills, including personal financial management, budgeting, saving, investing, and understanding credit. For children, this means gaining the knowledge, skills, and behaviours necessary to make smart money decisions as they grow.

It goes beyond just knowing how to count coins or open a savings account. Financial literacy covers understanding complex ideas like inflation, interest rates, budgeting, and debt, all while developing confidence and habits around money. Teaching kids about money early on sets the foundation for financially responsible adults.

Why Financial Literacy Matters for Aussie Kids A Cambridge University study found that children form core money habits by the age of seven. That means by the time they're in primary school, many financial attitudes are already set. Kids who learn about money early are more likely to budget wisely, avoid debt, and plan for long-term goals.

According to CBI Economics (commissioned by GoHenry and Wilson Wright), financial literacy can raise early career earning potential by up to 28%, and young people with high financial literacy are more likely to start their own business.

Sam Sims, CEO of National Numeracy, adds: "Being confident with numbers helps Aussies make everyday money decisions—from paying bills to comparing prices at the shops."

The Financial Literacy Gap in Schools Despite its importance, only about 40% of Aussie kids say they've received any kind of money education in school. Though financial education is part of the national curriculum in secondary school, many students want more. A study from the London Institute of Banking and Finance found 82% of young people want to learn about budgeting, loans, taxes, mortgages, and credit.

Many schools struggle to integrate financial education due to busy curriculums and a lack of teacher training. However, embedding financial literacy in everyday lessons or using external resources like Flareschool can help bridge the gap.

Why Should Schools Teach Financial Literacy? In our increasingly digital and complex financial world, children need to be prepared. Equipping students with strong money skills supports financial resilience and empowers them to plan for their futures.

Stewart Perry, Director of the Centre for Financial Capability, says: "Delivering financial education in schools is essential to combat Australia's financial capability crisis. It boosts money confidence and prepares kids for future financial hurdles."

Everyday Ways to Talk to Kids About Money Financial literacy doesn't have to come from textbooks. Parents play a key role, and everyday interactions can offer teachable moments:

• Talk about bills while paying them

• Let kids handle cash at the supermarket

• Discuss ATM withdrawals and where money comes from

Louise Hill, co-founder of GoHenry, notes that kids form attitudes toward money in early childhood. "Providing kids with an income—like pocket money—gives them real-life experience to practise planning, saving, and spending."

With teens, dive deeper. Discuss:

• Interest and borrowing

• The importance of credit scores

• Superannuation and investment

• Economic news and how it impacts their future

The Long-Term Benefits of Teaching Financial Literacy Early Helping kids build solid financial skills has lasting benefits:

• Financial Independence: Encourages kids to make their own financial decisions.

• Better Decision-Making: Equips them to compare, budget, and choose wisely.

• Debt Management: Understanding interest, credit, and loans helps avoid debt traps.

• Wealth Building: Savings and investments grow with time.

• Security: Financial skills provide peace of mind and preparedness for emergencies.

• Avoiding Scams: Savvy kids are less likely to fall for financial scams.

• Responsibility: Builds lifelong habits around accountability and money.

• Empowerment: They gain control over their own future.

Research shows that children who receive financial education early could be up to $70,000 better off by retirement.

Key Components of Financial Literacy At the heart of the Flareschool approach and GoHenry’s framework are six pillars:

1. Earn Teach kids the value of money through chores or side hustles. Help them understand payslips, superannuation, and even taxes. This builds a strong work ethic and understanding of how money flows.

2. Spend Teach budgeting basics and the concept of needs vs wants. Tanith Carey, parenting expert, emphasises: “Wants never end. Learning to prioritise needs prevents overspending.”

3. Save Create savings goals and use savings jars or junior bank accounts. Teach delayed gratification. Simonne Gnessen, financial coach, suggests framing savings as a gift to their future selves.

4. Invest Introduce kids to basic investment ideas like compound interest and shares. Let them track how a $10 investment grows over time.

5. Borrow Help them understand loans, credit cards, and interest. Discuss how borrowing responsibly builds a healthy credit score.

6. Protect Teach kids about scams, password safety, and how to protect personal info. Psychologist Linda Blair reminds parents: "Kids aren’t gullible—they're impulsive. Teach them to pause and think."

Fun Activities to Boost Financial Literacy

• Money Missions: Use apps like GoHenry or Flareschool to play budgeting games

• Needs vs Wants Game: Create a chart with shopping items

• Pocket Money Budgeting: Let kids divide money into spending, saving, and giving

• Mock Grocery Shopping: Have them compare prices and calculate totals

• Saving Challenges: Create a family saving goal with a reward

Dr David Whitebread from Cambridge notes, "Early money experiences shape adult behaviour. Starting now pays off later."

Conclusion Teaching Aussie kids about money is no longer optional—it's essential. From school programs to dinner-table chats, every bit of exposure helps children become financially savvy, independent, and prepared for adulthood. Tools like Flareschool can support this journey by making financial literacy engaging and accessible.

FAQs: Financial Literacy for Aussie Kids

1. At what age should kids start learning about money?
By age 7, kids form money habits—start as early as preschool with simple concepts.

2. How can I teach financial literacy at home?
Use pocket money, grocery trips, and everyday chats to teach budgeting and spending.

3. What are the benefits of early money education?
Kids gain independence, avoid debt, build wealth, and make smarter financial choices.

4. Are there good tools to support kids' financial learning?
Yes! Try Flareschool, GoHenry, or ASIC’s MoneySmart teaching resources.

5. Why isn’t financial literacy taught in every Aussie school?
Time constraints and lack of teacher training often limit comprehensive finance education.