Time to read : 6 Minutes
My first money lesson wasn’t in a classroom, it was with a piggy bank at home – dropping in coins, dreaming of the day it would be full. The tougher money lessons came much later, when I earned my first pay-check and discovered those coins would need to cover rent and groceries.
That’s when I realised learning about money at school would have made the transition from piggy banks to pay-checks much easier.
Even today, too many Aussie kids are walking out of school knowing how to solve algebra but not how to read a pay-slip. They may understand the ease of tap and go, but not the sting of credit card interest. And, this is a big problem.
Let’s look at why financial literacy from a young age is so important, and what schools and parents can do to help kids build strong money habits for the future.
What is financial literacy?
Financial literacy isn't just about dollars and cents, how to add and subtract amounts, or work out the right change to give to customers. It’s the life skill that helps kids turn pocket money into pay-checks, and pay-checks into long-term financial security.
Financial literacy is also missing from many classrooms, and without it, kids risk starting adulthood at a disadvantage. It’s like handing them a Monopoly board without explaining how money works. While they can roll the dice they won’t know how to buy, save or invest, leaving them stuck while others race ahead.
Think of financial literacy as 'money common sense'...
Without it, people risk falling into debt traps or missing out on wealth-building opportunities.
With it, people can understand and effectively use skills like budgeting, saving, investing and managing debt.
Why is financial literacy important for kids?
According to research from a Cambridge University study, children start forming money habits as young as seven. This highlights the importance of early money education.
If kids learn about money early:
They understand the value of saving versus spending.
They can avoid falling into debt as young adults.
They are better prepared for life milestones.
For example, if a 10-year-old learns that saving $5 a week could grow to $1,000 in just four years, they begin to see the power of consistency and patience.
What’s currently taught in schools?
While subjects like maths and economics may be common, when it comes to financial literacy these traditional subjects often don't cover financial literacy. And, knowing numbers isn't the same as knowing how to navigate financial challenges.
While the Australian Curriculum says learning about consumer and financial literacy occurs in the Maths, Humanities and Social Sciences and Technologies, the figures on younger people’s financial literacy skills are alarming.
According to a 2023 ASIC report, 68% of Gen Zs said finances are a major cause of concern. Almost half (49%) of Gen Zs who lack financial confidence say that feeling overwhelmed is their biggest obstacle to becoming more confident.
Students may be able calculate percentages, but don’t always link that to interest on a loan. And, when we consider money consciousness starts around age seven, not preparing kids earlier is creating a generation of unprepared Aussies.
What’s missing from the classroom are practical lessons which can be used in everyday life, such as:
How to create a simple budget.
How compound interest works, both positively for savings, and negatively for debt.
Real-world case studies such as choosing between saving for a phone now versus taking on debt.
How early money lessons shape the future
Just like interest, money skills compound – and when it comes to investing, time is your greatest advantage.
Students who learn about super at 16 are far more likely to start making voluntary contributions early, which can add hundreds of thousands of dollars to their retirement balance. That’s the magic of compounding.
On the flip side, not understanding how credit cards work can lead to years of debt. High-interest rates and minimum repayments can quickly escalate balances, making it difficult for young adults to catch up. Early education on managing credit can prevent costly financial mistakes and promote responsible spending habits.
Last year ASIC reported that young Australians with limited knowledge of credit cards can accumulate high-interest debt, sometimes compounding for years before they realise the financial impact.
What can parents do to improve kids’ financial literacy?
Parents are the first financial role models. Be conscious of your money behaviour, about what you show or don’t show, and have open money conversations.
You may be considering what lunch to pack or cartoon to watch, but give some thought on how to introduce good money habits early on with positive role modeling.
Children view their parents as the primary source of financial advice, according to The UK Strategy for Financial Wellbeing. 91% of children and young people aged 7–17 would turn to their parents if they needed advice about money.
So, what you do with your money and say about money to your children matters a lot.
Practical steps can include:
Involving kids in shopping to show how budgets work.
Setting up pocket money linked to chores, encouraging earning and saving.
Using online banking apps together to show how digital money management works.
💡Ask your child to set a savings goal, for example, $100 for a bike. Then work together to plan how long it will take to reach that goal. This helps make money tangible and creates a blueprint for setting financial goals.
Finding the right way to teach financial concepts to your child can be challenging. Moneysmart offers financial literacy lessons that can easily be adapted and expanded for school-aged kids, from primary through to high school.
Some of the lesson plans include:
learning about coins
budgeting for birthdays
advertising influencer awareness
importance of saving and compound interest
ownership, products, investing, risks and scams.
Bottom line
Financial literacy is as essential as learning to read and write. Kids who understand money aren’t just better prepared to manage their own finances, they’re better equipped to contribute to a healthier, wealthier society.
Schools, parents and communities all have a role to play. And just as we teach kids about the importance of food, sport and music, teaching money skills should also be a key part of their learning journey.
From piggy bank to pay-check, the sooner we start, the better chance we give our children to succeed. Not just to collect coins, but to get those coins to grow in value over time.
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Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
