When family budgets are stretched, well-intended parents might be tempted to shield their children from financial pressures, but research suggests this could be doing them a disservice.
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this → stretch → disservice
"Young people raised in households where money is discussed openly are more than twice as likely to feel on top of their finances," said Katrina Samios, the Financial Basics Foundation chief executive.
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Samios → raise → finances
"Parents often say they don't want to do it because they don't want to stress their kids out, but it actually has the opposite effect.
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it → say → effect
"The research has shown for many years that the children in those families where money conversations happen at home always show a higher level of financial literacy and capability."
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conversations → show → literacy
For 15-year-old Molly from Wollongong, NSW, learning about money went well beyond casual conversation at the dinner table.
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learning → learn → table
Taking part in ABC iview show Teenage Boss: Next Level, Molly was challenged to stretch every dollar in her family's budget across one month.
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Molly → take → month
Molly took red meat off the menu and replaced it with fish caught by the family — much to the disappointment of her younger sisters, Daisy, 14, and Bonny, 12.
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Molly → take → sisters
Mum Katrina's weekly "me time" dinners were scrapped, as was spending on extras like clothes and make-up.
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spending → scrap → clothes
Even school drop-offs and pick-ups were cut to save on petrol.
And while it wasn't all plain sailing, Molly's frugality meant she was able to save just shy of $2,000.
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she → cut → 2,000
Honest, age-appropriate conversations
Handing over the household budget to a teenager might sound alarming to some, but financial literacy experts say there's merit in including children in family financial conversations and giving them opportunities for hands-on experience from an early age.
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experts → hand → age
With cost-of-living pressures and interest rate increases forcing some families to reassess their spending, Ms Samios says "honest and age-appropriate" conversations are important.
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conversations → force → spending
When talking about budget changes, she suggests being optimistic with a focus on stability and problem-solving to remove the adult burden of financial stress.
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she → talk → stress
"Kids can handle clarity better than they handle vague stress," Ms Samios said.
"
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Samios → handle → stress
So, you frame it as a plan, not a crisis: 'Things have changed, so we're adjusting our spending to stay secure.'
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we → frame → spending
"If you frame it as the reductions are part of your plan and we're adjusting so that we stay on track, this really helps build that resilience and helps young people understand why things may be changing."
For younger children, Ms Samios suggests explaining your budget in broad categories like food, transport, bills and fun: "Young kids don't need to have spreadsheets, but they do benefit from simple transparency.
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they → frame → transparency
However, not all parents are in a position to teach money management skills, points out Ferdi Botha from the Melbourne Institute of Applied Economic and Social Research.
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Botha → teach → Research
"Age-appropriate school programs teaching basic financial literacy skills are therefore also important," Dr Botha said.
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Botha → teach → skills
"Ideally, children's financial capabilities should be developed through financial socialisation at home as well as through targeted financial literacy programs at school.
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capabilities → develop → school
"
Juggling 'peacekeeping' with the budget
Contrary to what many parents might expect, Molly wasn't anxious about having visibility of the family's finances.
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Molly → juggle → finances
"I really enjoyed it.
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I → enjoy → it
I've learned a heap about money and spending and saving," she said.
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she → learn → money
Managing the family grocery budget, meal planning and cooking each night also gave Molly some insight into the pressures that many parents face.
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parents → manage → that
"Trying to make everyone happy, like peacekeeping and stuff, I felt that was hard," Molly said.
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Molly → try → peacekeeping
"Daisy and Bonny were upset that there wasn't food that they wanted to eat and I was just making heaps of vegetarian curries and stuff like that."
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I → upset → that
While Molly's belt-tightening was effective, even she admits it isn't sustainable in the long term.
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it → admit → term
"I don't think we would do that extreme of a budget again," she said.
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she → think → budget
Finding a sense of appreciation
Molly may have been the one budgeting and tracking expenses, but the experience taught the whole family valuable lessons.
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experience → find → lessons
For Bonny, going without made her appreciate what she normally had.
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she → go → what
"After that month I was like, 'Oh my gosh, I love my life,'" she said.
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she → love → life
"It made me so much more grateful because I got to see what it was like with less money."
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it → make → money
Daisy came away with a clear rule about responsible spending: "If you don't have the money, you shouldn't get it," she said.
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she → come → it
And for Molly, she found the practical money management experience "very beneficial", and questions whether shielding kids from everyday financial conversations can get in the way of their learning.
"Talking openly about what you're doing — and not making money so much of a hush-hush concept … it's important for everybody to know because it's a big part of life," she said.
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she → find → life
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