Australian primary school-aged kids show strong knowledge of 'earning' money, while lagging behind on 'budgeting', according to the CommBank Common Cents Report. CommBank today released findings revealing the 'Common Cents' of young Australian's financial literacy knowledge, coinciding with the commencement of the 2016 school year.
To develop the report, CommBank determined five core competencies that make up a strong financial acumen: spending, saving, earning, budgeting and investing. The national ‘Common Cents’ score average showed primary school-aged Australians (5-12 years) sit at 63 points out of a possible top score of 100. Interestingly, Australian kids pip their parents by one point; parents’ average ‘Common Cents’ score sits at 62 out of 100.
Overall, girls were found to have stronger financial literacy skills than boys (65 points vs 61). Children in Western Australia are the nation’s leaders in how to earn money but weakest in how to save, while those in South Australia are the best budgeters. New South Wales tends to lag behind its fellow states when it comes to each of the core financial competencies.
The report reveals two thirds (69 per cent) of primary school children in Australia receive pocket money, and 82 per cent of these are expected to complete tasks to earn their pocket money. This suggests parents are teaching kids the value of money and how to earn it; reflected in the ‘earning’ national score where Aussie kids’ earning skills far outweighed the national overall financial literacy score, by 20 points. Additionally, parents’ budgeting was found to be their strongest skillset – something that may not be passing down to their kids. Additionally, the national average pocket money for primary school kids has increased from $5.57 in 2014 to $5.70 in 2015.
Matt Comyn, Group Executive, Retail Banking Services, Commonwealth Bank, said: “Commonwealth Bank has a long history of helping young Australians learn key financial skills, with our School Banking program entering its 86th year in 2016. This national education initiative provides children with the relevant knowledge and skills to be smart with their money and set themselves up for lifelong financial success.”
The findings also revealed children seem to struggle with the concept of delayed gratification, a key driver of success in the topic of investing. Over half of those surveyed said they would take $5 now, over larger sums if they have to wait. Only the 11-12 year olds are more likely to wait for more money.
Other key statistics include:
- Aussie kids think it’s more important to save for things they want (49 per cent) over things they need (43 per cent).
- Two thirds of Aussie kids (68 per cent) like saving more than they like spending.
- Three quarters of kids (77 per cent) understand they can get more money from doing extra jobs around the house.
- Half of Aussie kids know what a budget is (50 per cent), whereas one in five (22 per cent) think a ‘budget’ is simply a sheet of paper with numbers on it.
- Children from households with less than $50,000 annual income score similar results (66 vs. 67) to those from families earning over $150,000 – and higher than kids from mid-income households.
Veronica Howarth, Head of School Banking and Youth, Commonwealth Bank, said: “We understand the topic of money can be broad and often overwhelming for parents, as they navigate their child’s financial education in addition to everything else. It’s often hard to know what they should be teaching their child, when and where they should focus their attention.
“We developed the ‘Common Cents’ score to unearth where Aussie kids are the savviest when it comes to money, and in which areas we can help parents understand and children to develop specific skills,” said Ms Howarth.
To help parents determine their own child’s ‘Common Cents’, CommBank has developed an interactive financial quiz for kids, based on the national research survey, to help parents uncover the areas in which their children can improve and structure their financial education.
To download the ‘Common Cents’ quiz visit the Beanstalk at commbank.com.au/commoncentsquiz. To find out more about School Banking, please visit commbank.com.au/schoolbanking.
Commonwealth Bank is committed to improving the financial literacy of young Australians and has been supporting the development of the education sector for more than a century. In 2015 we announced a $50 million investment in our financial literacy programs and a partnership with Social Ventures Australia to offer free, simple and accessible research on different teaching methods.
Practical tips to help improve your child’s ‘Common Cents’
We’ve identified the five core competencies that make up a child’s financial literacy and provided helpful tips under each one. For more advice and practical tools across all these topics, please head to The Beanstalk at commbank.com.au/commoncentsquiz.
- Saving: Before your child buys something, showing them some of the other things they could get with the same amount of money may help them to make a responsible decision. If they want to buy a $100 item, you could equate this to 6 trips to the movies to demonstrate the scale of their purchase.
- Spending: Avoid impulse purchases. Help your child understand that thinking carefully before they buy will ultimately mean they get more of the things they actually value.
- Earning: Consider giving your child pocket money – it's a good way to teach them about the value of money and where it comes from. Reward them for jobs they do, giving them responsibility around the house and creating opportunities for them to earn additional money from doing extra tasks.
- Budgeting: Help them set up a simple budget plan. Factor in the cost of the item they're saving for, how much pocket money they can contribute each week and how many weeks it will take to reach the goal. It doesn’t have to be a spreadsheet, a budgetlist of money milestones underneath it!
- Investing (or growing your money): Introduce the use of big piggy bank or their very own bank account that can act as a minder of their money until they’re ready to use it. You can then begin to explain the idea of earning interest and teaching them how they can grow their money. For example, offer your child the option of doubling their pocket money if they save it or complete extra tasks.
Ultimately, you want to give your child responsibility, and encourage independence so kids develop healthy habits they’ll carry with them into adulthood.
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