In his 1971 poem, This Be The Verse, English poet Philip Larkin warned of parents filling children with “the faults they had”, and adding some extra, “just for you”.
And according to new research by micro-investment app, Raiz Invest, this is especially true when it comes to financial habits.
The recently released research found that one-in-four Australians say they received little to no money education from their parents, and only 28 per cent said they felt adequately educated by their parents when it comes to money.
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Sons were 8 per cent more likely to report being taught money management (78 per cent) than daughters (70 per cent).
Additionally, while 80 per cent of parents are confident they can teach their children good financial literacy lessons, the majority (54 per cent) focused on teaching children to restrict spending and save, with 60 per cent saying they wouldn’t feel confident teaching their kids about how to invest.
This, Raiz Invest CEO George Lucas said, is a problem as it places the focus on saving and purchasing, rather than learning how to build wealth.
“It’s common for Australians to focus on expenditures, which are important. But investing and finding the best rates for their savings are also important,” Lucas said.
“Many consumers are unaware of the interest rate they’re earning on their bank savings, and they often lack practical tools for investing.
“The end result is that too many Australians are unaware of the best options for protecting and growing their income.”
Are parents setting good money examples?
While 71 per cent of parents said they try to save for their children’s future, just 27 per cent said they actually had a regular savings plan set up.
And, only one-in-six have a savings and budgeting plan for themselves.
But financial literacy is becoming a bigger priority, with 49 per cent of Australians younger than 35 saying they had conversations about managing their finances with their parents, compared to only 29 per cent in older cohorts.
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Australians also believe that financial education shouldn’t just fall to mums and dads, with 60 per cent saying schools need to take a bigger role, and 75 per cent saying schools don’t do enough to teach students the financial skills they’ll need as an adult.
According to the CEO of children’s investing platform iTrust Invest, Michael Ashton, in a world of record-low interest rates, leaving money in a bank account isn’t always the best way to save for your kids.
“If you’re saving into a bank account, 80 per cent of accounts are losing money because they get overtaken on inflation,” he said.
“Whereas there’s virtually no asset class that could outperform equities over the long term - much higher than you could ever get from a bank account.”
He told Yahoo Finance that there isn’t any set amount parents need to invest for their children, and that the rule is simply “the earlier the better”.
“Putting in $1,000 when the child is born is worth four to five times as much as if you put it in when the child is seven or eight years old, because the compound interest accelerates the interest.”
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