Why it’s never too early to start teaching your children about money

Here’s how you can help your children build financial literacy

Australia is one of the wealthiest countries in the world, yet many Australians struggle with financial literacy.

Vanguard’s 2024 How Australia Retires report found that only one-third of Australians were very confident or extremely confident in making financial decisions.

While most Australians (56%) were very confident or extremely confident in their understanding of saving and deposit accounts, far fewer felt the same about other investment products.

Only 20% of Australians were very confident or extremely confident in their understanding of shares, 16% in managed funds, 13% in exchange-traded funds (ETFs), and 10% in bonds.

Even more concerning is that less than one-third of Australians are very confident or extremely confident in their understanding of superannuation products.

Research by ASIC has shown that families play a critical role in establishing and supporting financial attitudes and behaviours.

If you’re a parent, here’s how you can help your children build financial capability throughout their lives.

It’s never too early to start teaching children about money

Most families leave financial discussions until later in a child’s life. But young children are learning about money by observing and participating in everyday activities like trips to the supermarket.

According to ASIC’s Young People and Money report, there is emerging evidence that children as young as five have an emotional response to spending and saving money.

“Very often money is an area that gets glossed over for young children; young children are assumed not to have agency or real input,” said Sue Dockett, an emeritus professor at Charles Sturt University who contributed to the report.

Truth is that children are living these experiences, and we shouldn’t assume children don’t have the ability to understand or comprehend some of what’s going on.

Why it’s important to talk to your children about money

You don’t need to be an expert to teach your kids.

By involving them in conversations about money and encouraging them to make decisions about the trade-offs between saving, spending and investing, you can make the topic part of everyday life.

Here are some tips for talking to your kids about money:

• Explain where money comes from: Describe how you earn the money you spend. Explain that you get a certain amount of money each time you get paid. Say how you use that money to cover the essentials, like food, clothes and housing.
• Talk about needs and wants: Talk about how you prioritise what you spend your money on. Encourage your kids to think about needs and wants before spending money.
• Track spending: Show your kids how to track their spending to see where their money is going.

How you can teach your child about investing

One simple way to teach your children about investing is to open a Vanguard Personal Investor Kids account.

You can start investing regularly today with as little as $25 per fortnight, month or quarter, to help grow your child’s wealth for the long term. As the parent or guardian, you have full control and responsibility for the Kids Account.

Personal Investor Kids provides access to Vanguard’s four ready-made diversified managed fund portfolios – the Vanguard High Growth Index Fund (Kangaroo), Vanguard Growth Index Fund (Emu), Vanguard Balanced Index Fund (Wombat) and Vanguard Conservative Index Fund (Koala).

How to involve your children in decisions about money

Giving children some responsibility for small financial decisions is a great way for them to learn.

It can also be an opportunity to teach them important lessons about the value of money and the benefits of saving.

Here are some ideas for activities that you could do with your child to help them build financial capability:

• Involve them in purchasing decisions: Work together to research online or shop around to find the best deal for something they want.
• Do a family budget: This can help your children understand the value of money and making trade-offs.
• Demonstrate the benefits of giving: You could encourage your children to choose a charity to regularly donate to and explain the benefits of helping others.
• Pay pocket money for jobs: You could choose to pay for certain tasks, like mowing the lawn or washing cars. It’s a good way to teach children about the link between work and money.
• Help them save for a goal: Use a piggy bank or savings account to help your children see their money grow as they save for a goal.

ASIC’s Young People and Money Survey found that young people have a strong desire to learn about topics like investing, managing money and filing a tax return.

The more learning experiences you can provide for them, the better prepared they will be when it comes time to manage their finances on their own.

Source: Vanguard April 2025
Reproduced with permission of Vanguard Investments Australia Ltd
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.
© 2025 Vanguard Investments Australia Ltd. All rights reserved.
Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.