Financial literacy is more than just knowing how to count coins or use a savings account—it’s about having the confidence and knowledge to make sound financial decisions throughout life. It includes understanding concepts like budgeting, saving, interest, borrowing, investing, and even avoiding scams. It’s not just about dollars and cents; it’s about setting up your kids for a secure and empowered future.
In today’s fast-paced and financially complex world, giving children a strong foundation in money management is no longer optional—it’s essential. And here’s why.
What Is Financial Literacy?
In simple terms, financial literacy is the ability to make informed, responsible financial decisions. It covers a broad range of concepts and behaviours, such as:
- Spending wisely
- Budgeting
- Saving for the future
- Understanding interest and inflation
- Using financial products like credit cards, loans, and bank accounts
- Avoiding debt and financial scams
Being financially literate means being able to navigate real-world money decisions—whether that’s choosing the best savings account, budgeting for weekly groceries, or understanding how a loan works. For kids, learning these concepts early can help build a mindset of responsibility and confidence.
Why Is Financial Literacy So Important?
Financial literacy isn’t just a nice-to-have. It’s a life skill that impacts everything from everyday spending to long-term wealth. According to a CBI Economics study commissioned by GoHenry and Wilson Wright, financial literacy can improve early-career earnings by up to 28%. That’s a significant edge in life that begins with early education.
Louise Hill, Co-founder and CEO of GoHenry, puts it clearly:
“Financial literacy provides the opportunity for more young people to have a bright and prosperous future… we just need to empower them with the right tools and knowledge.”
Moreover, a Cambridge University study found that children form basic money habits as early as seven years old. That means the foundation for healthy (or unhealthy) financial behaviour starts in primary school, long before many kids ever learn how to manage a bank account.
Financial Literacy in Australia: The Current State
In Australia, financial education is part of the curriculum—but only to a limited degree. While secondary schools are expected to touch on money matters, many students still leave school without a firm grasp of the financial basics. A study by the London Institute of Banking & Finance revealed that 82% of young people want to learn more about money, particularly around credit cards, loans, mortgages, pensions, tax, and debt management. This highlights a growing demand for better financial literacy for students—practical, real-world knowledge that helps them navigate adult life with confidence.
Yet, only about 4 in 10 students say they’ve received any real financial education at school. And many teachers say they’d like to teach more on the subject—but face barriers like limited time, resources, and confidence.
Sam Sims, CEO of National Numeracy, adds:
“Feeling confident with numbers is a vital life skill, particularly when it comes to managing your money… Without that confidence, it’s harder to stay in control.”
Why Should Financial Literacy Be Taught in Schools?
We’re living in a digital-first, buy-now-pay-later society, where kids are growing up with Apple Pay, Afterpay, and online shopping as the norm. If we don’t teach them how money really works, they could fall into debt or make poor decisions that affect them for life.
Teaching financial literacy in schools helps:
- Develop financial resilience
- Prevent future debt and financial hardship
- Boost long-term economic independence
- Improve their understanding of the working world
Stewart Perry from the Centre for Financial Capability explains:
“In order to combat the national financial capability crisis, it is vital that children and young people are given the opportunity to develop money management skills through robust education.”
Talking to Kids About Money (Without the Lecture)
Financial literacy doesn’t have to be a stiff or awkward topic. It’s best taught through everyday conversations.
Louise Hill suggests:
“When kids are given an allowance, they get real-life practice with skills like planning, saving, and understanding delayed gratification.”
You can start with basic concepts while shopping:
- “This costs $10—how many chores would you need to do to earn that?”
- “If we wait for this item to go on sale, how much would we save?”
As they grow, introduce more complex ideas like:
- How banks and interest work
- What a credit score is
- Why borrowing isn’t ‘free money’
Teenagers especially benefit from talking about superannuation, the stock market, student loans, and how to manage their paychecks and taxes.
The Long-Term Benefits of Early Financial Literacy
Teaching kids about money isn’t just about preparing them to pay the bills. It sets them up for lifelong success.
A GoHenry study found that children who learn about money early could be $70,000 richer in retirement. That’s the power of compounding knowledge and smart habits.
Some key long-term benefits include:
- Financial independence: Kids learn to make their own money decisions without relying on others.
- Better decision-making: They understand the long-term impact of saving, spending, and borrowing.
- Debt management: With knowledge of interest and credit, they’re less likely to fall into financial traps.
- Wealth building: Financially literate individuals are more likely to invest and grow their wealth.
- Security and peace of mind: Understanding money reduces stress and builds resilience against setbacks.
- Avoiding scams: They’re better able to spot fraud and protect their financial information.
- Empowerment: It gives them the confidence to pursue goals like travel, business, or property.
The 6 Key Pillars of Financial Literacy (According to GoHenry)
At GoHenry, financial literacy is built on six core areas:
1. Spend
Spending isn’t just about buying—it’s about making smart choices. Teach kids:
- The difference between needs and wants
- How to compare prices and look for value
- How to avoid impulse buying
Parenting expert Tanith Carey says:
“A huge part of financial literacy is learning to prioritise spending. The line between needs and wants is where most financial decisions go right—or wrong.”
2. Save
Saving teaches patience, planning, and goal setting. Help kids learn to:
- Set short-term and long-term savings goals
- Delay gratification for a bigger reward
- Understand interest and savings accounts
Simonne Gnessen, co-author of Sheconomics, puts it beautifully:
“Frame savings as a future gift to themselves—they’ll thank you for it.”
3. Earn
Earning money gives kids a sense of accomplishment and value. Whether it’s pocket money, chores, or a part-time job, learning to earn helps them understand:
- The effort behind money
- Tax, payslips, and superannuation
- How to turn a skill or passion into income
According to GoHenry, 75% of children believe financial education will help in their future career—a belief worth nurturing.
4. Borrow
Borrowing is part of adult life—but it needs to be done smartly. Kids should learn:
- What credit is and why people use it
- How interest and repayments work
- The impact of credit scores
Teaching your child the risks and responsibilities of borrowing can protect them from future financial stress.
5. Invest
Even simple lessons on investing can create a wealth-building mindset. Introduce them to:
- Basic concepts of stocks and shares
- Risk vs reward
- Long-term vs short-term investments
- Compound interest and how money grows over time
6. Protect
In a digital world, protecting financial information is key. Help kids understand:
- Online scams and phishing
- Safe online purchases
- How to create strong passwords
- Why they should never share banking info
Psychologist Linda Blair warns that kids aren’t gullible—they just act impulsively. “Impulse control takes time to develop,” she says, “so we need to help them pause and think before clicking.”
Fun Activities to Teach Financial Literacy
Learning about money doesn’t need to be boring. Try these practical activities:
- Give regular pocket money: Let them budget and save weekly.
- Play financial games: Monopoly, budgeting apps, or even “grocery store maths.”
- Open a junior bank account: Let them track balances and transactions.
- Use goal charts: For saving up for a toy or a game.
- Teach with real-life situations: Compare phone plans, shop for deals, or budget for a party.
Dr David Whitebread from Cambridge University notes:
“Children learn best through experiences that support planning, reflection, and emotion regulation—all key to financial behaviour.”
Final Thought: Start Young, Start Simple
Financial literacy isn’t just for adults, and it’s not something to wait until high school to teach. From understanding the value of a dollar to investing for the future, every lesson counts.
By introducing financial concepts early and reinforcing them often, you’re giving your child one of the most important tools they’ll ever need—the ability to control their financial future and live life on their own terms.
