Aussie parents reconsidering financial assistance: Evolution from pocket cash to investment portfolios
In a changing financial landscape, Australian parents are stepping up to educate their children about the importance of understanding value, responsibility, and planning. A study conducted by the Department of Families, Housing, Community Services and Indigenous Affairs (Australia) reveals that conversations about budgeting, saving, and investing can demystify these concepts for children.
The trend of investing on behalf of children is strongest among Millennial parents (56%) and high-income households earning over $150k (53%). These investments, typically made in ETFs, shares, or savings accounts, are usually accessible by children around the age of 20 years old.
The average weekly pocket money for Australian children has seen an increase from $11.05 to $16.55, with over 80% of children still earning pocket money by performing chores such as dishes, vacuuming, and pet care. The belief that adult children should contribute to household expenses is strongest among those who received pocket money themselves and were expected to contribute at that age.
As financial education starts at home, parents are shaping how children think about money through conversations about pocket money, chores, savings, budgeting, and investing. Matt's Tips for raising money-smart kids include starting early with pocket money and chores, making money concepts tangible, talking about investing, encouraging earning, being transparent about financial decisions, and celebrating milestones.
Support from parents can range from rent and medical bills to holidays and even business ventures. Boomer parents are more likely to say that their adult children should be financially independent, while Gen X parents are the most generous in continuing to financially support their adult children. Interestingly, Boomer parents tend to hold off granting access to investments until their children are above 22 years old.
The study also reveals that over 37% of parents now invest money on behalf of their children, with an average investment of $2,212 per year. Moreover, over 53% of parents with adult children continue to financially support them, with an average monthly spend of $1,635.
Despite the importance of these conversations, many families avoid money conversations due to perceived complexity or discomfort. However, the earlier children are taught about money, the better prepared they'll be to thrive in a fast-changing financial world. Aussie parents are evolving from pocket money providers to financial mentors, instilling in their children the skills and knowledge needed to navigate the financial landscape with confidence.
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