Newsletter: June 2015
The Wealth Academy assists parents, teachers and professionals in the financial services industry to help their children, students and young clients to improve their financial knowledge and skills. We look forward to providing news, research, readings, hints, provocations, and some humour, to help younger generations become financially capable.
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The teenage economy
Parents are constantly faced with the issue of how to help their teenage children manage and respect money, to understand its value and appreciate the work that someone has taken to earn that money.
This article was recently published in the USA and while the initial context related to teenagers of very wealthy families, the questions raised need to be considered by all parents.
An extract: Data on allowances is hard to come by. But conversations with dozens of teenagers from public and private schools yield some rough approximations: They describe a typical New York allowance to be in the neighborhood of $20 a week, depending on whether the money is given as a simple token, a reward for specific work, a means of quieting a whiny kid, or a way of fostering self-sufficiency, requiring the child to buy his own clothes, groceries, and school supplies. Kyle Brandt-Lubart, a 16-year-old sophomore at Bronx Science, receives $45 a week, a figure she and her mother arrived at after making an extensive list of what she spends money on: clothing, transportation, food, going out on weekends. “I think it works well enough,” she says. “I learn to manage money, even if it’s on a small scale. At the same time, I’m supposed to save $5 a week, but that never actually happens.” ...
Are teens interested in investment? Many are!
Every now and then I hear a voice in the crowd say that teenagers are not interested in finance and investment matters. What an uninformed view! Sure there will be teens who have never been exposed to these concepts and of course have no interest. There will be many who have had some exposure through their parents and still may have little or no interest. But there are also many teens who do have this interest and would like to know more.
If you would like to share examples of teens investing then the following link may be useful. It provides 21 short biographies of teens
- Curtis Knee, 14, began investing a year ago. He likes value investing.
- Dash Yarnold, 14, got interested in the market when he was 11 after he overheard his parents saying 'The market is down.' He likes to trade tech stocks and commodities.
- Mohammed Islam, 16, got introduced to penny stocks by his cousin when he was 11 years old. He likes to trade oil and gold futures these days.
- Buena Patria, 16, began researching the markets after watching CNBC when he was 14. He trades currencies.
- Alfonso Rodriguez, 16, got into trading after watching 'Mad Money' two years ago. A couple months later, he bought his first stocks -- GE and AT&T.
What is a financial license?
Any business or person that offers or advises you about financial products must be an Australian Financial Services (AFS) licence holder - they can be licensed personally, as a director or employee of an AFS licence holder, or as an authorised representative of an AFS licence holder. An AFS licence offers you some protection if something goes wrong, so it’s important to ensure your financial planner has this license. One way to check this, is to take a look at ASIC's database. The kind of information you will find on there is the financial planner’s qualifications, experience and employment history, the product areas they can provide advice about, whether they are a member of any professional bodies or industry associations and whether they have been the subject of disciplinary action by ASIC. A simpler way to ensure your financial planner is properly licensed and qualified to provide advice, is to look for a CERTIFIED FINANCIAL PLANNER® professional. You can search for one on Find a Planner.
Welcome to Econteen!
If you are an teacher of economics or a parent helping your teen to understand economic concepts taught at school, then this website may be useful. It is called Econteen
We are a group of students who write articles about Economics.
Trying to cover different ideas about investment, economics, and the international economy, we pretty much write, write, and write to our hearts’ content to do two things: Share what we know AND help other high school students who are interested in learning about economics.
It's tax time!
For parents and teachers, this is a time when you should take the opportunity to talk tax with your children or students. This should happen whether they have to complete a tax return or not. Here are a few points of discussion to have with teenagers at school or at home.
Teenagers may need to lodge a tax return, particularly if they have a part-time job or are earning money from investments put into their names by relatives. Under 18 year olds have special, higher, rates of tax applied to some unearned income such as bank interest or dividends on shares. This is to stop parents who pay tax at higher rates splitting income with their lower earning children.
The tax year ends on 30 June. This is a time when parents start to gather together the information they need to complete their tax returns. Parents should show their children how they have organised that information during the previous 12 months and what information they have needed to keep. It also helps if they explain why they have kept that information.
Even if your teenagers don’t have to complete a tax return this year, it won’t be long before they do! Helping them to build their tax understanding now, will help them in the years to come.
Online video: Five financial rules to live by! (Ted)
LearnVest CEO and Founder Alexa von Tobel recently delivered a TEDx speech about personal finance. She told the story of one (hypothetical) girl–and the five financial principles that will shape her life.
Like most of us, “Jessica” never took a single personal finance class in school, college, or ever, for that matter. Alexa shares five simple financial rules that can help us, our students and teenage children to stay on track with money, no matter where you’re starting out right now, or how much you learned (or didn’t) about money growing up.
View the video
Car insurance and young drivers
Teenage financial capability improves when they understand insurance. Share the following message with your teenage children or students.
The feeling of hopping in your car, putting on some tunes and heading out for an old-fashioned road trip is quite unlike any other. Unfortunately for anyone under 25 years of age, it can also be pretty costly. And with good reason.
If we just look at the stats, drivers under 25 make up one quarter of all road deaths, yet only account for around 10-15% of drivers, while almost half of all young Australian injury deaths are due to traffic accidents. Research has also shown that car accidents from young drivers are more serious, causing more property damage than older drivers.
Numbers like this mean insurance companies charge young drivers, particularly young male drivers, more. In their view, the risk is much higher. But it’s not all bad news as there are things you can do not only make you a safer driver but save your money on your insurance.
• Look for insurers that specialise in policies for young drivers.
• Choose a safe, economical car. The more expensive or modded your car is, the more it will cost to insure.
• Enrol in a safe driving course. Not only will you be a better driver, but your insurer may reward you with lower premiums.
• Drive safely and keep a clean driving record.
Understanding financial services
Consumers want to know more about financial services, but don't understand it well. This is a key message from an online video interview between Sally Loane, CEO of the FSC and Jim Minto, CEO of TAL Limited.
Teachers, If you are looking for a discussion starter in your classroom about financial services, financial planning, life insurance and the industry's desire to meet the needs of consumers, consider this short video. View the video
Key questions to ask students are:
- Why don't consumers understand financial services well?
- Should financial service companies accept some responsibility in 'educating' the younger generation of Australians?
- How could such companies help teens-young adults to improve their understanding of their industry?
A sombre reflection on financial literacy
Financial literacy levels in Australia and around the world are disturbingly low. A recent research paper by the global leaders in research into financial literacy, Annamaria Lusardi and Olivia Mitchell, both based in the US, provides the broadest review of the research undertaken on this topic. While the results are concerning, Lusardi and Mitchell take the positive view that there is a clear opportunity to improve financial literacy levels and benefit society as a whole.
Read the full article
Author: David Bell, Chief Investment Officer at AUSCOAL Super. He has been a lecturer at Macquarie University since 2002.
Next issue: Research outcomes
The Wealth Academy has partnered with QUT School of Business (Accountancy) to conduct a national research project of first year tertiary students. Specifically we want to know the perspectives of students who have recently left secondary school regarding their financial education experiences at school and their views of the financial world around them.
Several universities around Australia are collaborating with this research. The data currently available presents a disturbing picture of the financial learning experiences of our youth.
We will begin sharing some of these results over coming issues of the monthly enewsletter..
Teachers: An open invitation
The Wealth Academy values partnerships and relationships that will ultimately help young people become more financially capable.
Teachers can support this cause by:
- contacting us with ideas to improve their financial education program (What do you need?)
- contributing resources or articles for us to consider for publication
- participating in our research program.
We want to help, as do our partners. Help us to help you.
Have you viewed our 2015 issue activity books. Check them out on our website.
The activity books are available for registered schools.
Find out more
Register your school here
Need help registering. Contact us
Does your school need a school financial education sponsor? We can help.
Find out more about sponsorship on the home page
Please share this newsletter with fellow parents, teachers and financial service professionals committed to the financial education of Australian youth. Financial capability does not happen by accident or by default—it requires effort. A united effort will bring greater benefits.
Yours in learning
Ken Swan, Director The Wealth Academy
Help your network: We are proud to consider ourselves lifelong learners, so please send us information, ideas and comments that you think we should share with our network. All inquiries and submissions for publication should be directed to the Manager using the contact options on our website www.thewealthacademy.com.au .
Information provided is for educational purposes and does not constitute financial advice. You should obtain independent advice from an Australian financial services licensee before making any financial decisions. Although The Wealth Academy (TWA) has made every effort to ensure the accuracy of the information as at the date of publication, TWA does not give any warranty or representation as to accuracy, reliability or completeness of the information. To the extent permitted by law, TWA and its employees, officers and contractors shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided or omitted or from any one acting or refraining to act in reliance on this information.