Are you failing your 'children' on this front?

It’s hard to believe that even in the 2020s, we are routinely failing to teach our girls the basics of financial literacy, setting them up to make poor decisions that could affect their lives well into the future.

New Australian research has found that parents unconsciously leave their daughters out of financial decisions, while giving sons many more opportunities to develop their skills in household spending, buying big ticket items and investing, The New Daily reports.

A Melbourne Institute study, Financial autonomy among emerging adults in Australia, found that young women on average have lower levels of financial autonomy than young men while living at home.

Researchers believe this is because parents offer their daughters fewer opportunities to help with household finances in the years before they leave the nest.

Women with Cents founder Natasha Janssens told The New Daily it reflected an unconscious bias passed down through the generations.

“Because, traditionally, earning an income was the male responsibility, our parents, grandparents and great grandparents didn’t tend to talk to women about financial matters,” Ms Janssens said.

The report, which analysed data from the Household, Income and Labour Dynamics in Australia (HILDA) survey, shows the disparity only widens with age, with women’s financial literacy developing more slowly than men’s.

Leaving home and paying your own way are traditional markers of transitioning to adulthood, but as young adults on average are reaching these milestones later in life, their exposure to financial decision-making in the nest becomes more critical.

And it’s much harder today to take that first step to a major investment. As the price of real estate has rocketed, home ownership has become impossible for most young adults. In the early 1970s, 27 per cent of 25 to 28-year-olds owned a house. That figure had fallen to only 16 per cent in 2018. With that milestone out of reach, it’s harder to invest wisely and more tempting to make frivolous purchases.

“If young women are not gaining experience in financial decision-making while living at home … [they] are likely to fare poorer in their initial financial decisions, which could have many negative far-reaching and long-term financial implications,” said the report authors.

“Potentially, this could manifest itself with poorer choices with respect to high-interest borrowing, responsible credit-card purchasing and financial planning.”

Financial planners say it’s time schools made a real investment in children’s future wealth.

“Financial literacy should be a compulsory subject throughout all of schooling, just like English and maths,” says Marlies Hobbs who, with her husband Jai, has written a book for kids on the subject called FLY: Financially Literate Youth.

The entrepreneurs want children to avoid the traps of bad debt and poor credit ratings.

“No matter what career you end up in, and what income level you end up in, it’s what you do with that income that’s going to determine the success of your future,” Ms Hobbs told the ABC.

The Barefoot Investor Scott Pape agrees that schools need to get involved.

“Managing money is the one exam you’re going to be tested on every day of your life,” he told Radio National’s Life Matters program.

“What we’ve seen is that in the last 20, 30 years, financial education really hasn’t really gone anywhere in schools.

“But the banks and financial institutions’ ability to trap and target young people has become ever more sophisticated.”

Mr Pape is referring to the marketing tools banks use to capture the next generation of customers in campaigns such as Dollarmites, Commonwealth Bank’s school banking program. 

Banks claim they are educating children about money but corporate regulator ASIC says there is “limited evidence” they help children learn how to save.

The Victorian government has banned these programs in state schools, and the ACT has followed too.

Multiforte Financial Services director Kate McCallum told The New Daily two of the biggest mistakes parents made when talking to children, and daughters, in particular, about finances was not allowing them to make small mistakes and giving advice from personal experience rather than getting their kids to seek out professional advice.

Ms McCallum said allowing children to spend birthday money on a toy they might regret, or letting them lose a tiny investment, leads to better choices over time.

“If your child makes a mistake, you shouldn’t take over – and if things do go belly-up, you shouldn’t help them by instantly paying them back the money, but help them get a better education, as they should learn to be accountable with their decisions,” Ms McCallum told The New Daily.

Have you treated sons and daughters equally in terms of their financial literacy? Should finances be taught in schools? Have you helped a child out of a financial bind? 

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Written by Rebecca Tolan

Rebecca has worked in journalism for 20 years, been a DIY-er for more, and is in the middle of her very own grand design. Retirement seems a long way off! In her spare time she rows surfboats, plays volleyball with her kids and dreams of future holidays.


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