We live in a world where money is becoming increasingly important.

As interest rates and inflation continue to rise, and the most common products and services we purchase become more expensive, it’s more important than ever for children to understand how to manage money.

Whether you have children of your own, grandchildren, or (adopted) nieces and nephews, or plan to have children at some point in the future, you can play an important role in educating them financially as another way to pass on your financial development.


It’s never too early to start learning about personal finances.

Money is a fundamental part of our lives and the earlier we start learning about it, the better equipped we’ll be to make sound financial decisions later on in life.

These skills are essential not just for managing finances, but for everyday life. By teaching kids how to budget and make responsible decisions with their money, parents can set them up for success both financially and personally.

That’s why it’s so important for parents to teach their children about financial literacy early on.

What does it mean to be financially literate?

Financial literacy is the ability to understand and use financial concepts in order to make sound decisions. This includes understanding things like credit, budgeting, investing, and saving.

It’s important for parents to be financially literate so that they can teach their children how to manage money wisely.

Why Is Financial Literacy Important?

There are a number of reasons why financial literacy is so important, for parents and children.

Financial literacy helps children develop important life skills such as goal-setting and decision-making. 2. Children who understand that money doesn’t grow on trees are more likely to save their pocket money and think twice before spending it.

Financial literacy has been shown to boost academic performance. A recent study found that students who received financial education had higher grades in maths and were more likely than their peers to enrol in University.

How Can Parents Teach Their Children about Financial Literacy?

There are a number of ways that parents can teach their children about financial literacy. One way is to set up a pretend bank account for them where they can deposit allowance money each week. Another way is to help them save up for something they really want by matching each dollar they save.

Parents can also teach their children about budgeting by giving them an allowance that they have to use to pay for things like snacks, entertainment, and clothes.

Whatever method parents choose, the most important thing is to be patient and keep the lines of communication open so that children feel comfortable asking questions and learning more about money.

Teach your children about financial literacy by setting an example

One of the best ways parents can teach their children about finances is to lead by example.

Show your child how you save money, how you make wise spending decisions, and how you manage your debts. You can also teach your child about budgeting by giving them an allowance and helping them track their spending. There are also a number of great financial literacy resources available online.


The most important thing is to be patient and keep the lines of communication open so that children feel comfortable asking questions and learning more about money.

Parents play a vital role in teaching their children about financial literacy. By starting early, making it fun, and letting them make mistakes, parents can set their kids up for success both financially and personally.

Financial literacy is an important life skill that will benefit your child in many ways, so don’t hesitate to start teaching them about money today!

Reverse Mortgage Sticky Notes Sun

How does a Reverse Mortgage work in Australia?

If you’re over the age of 60 and own your home in Australia, you might have heard about using a reverse mortgage to borrow money using the equity you’ve built up over the years.

With house prices rising at a much faster rate than income for a number of decades, three times the amount of people are carrying mortgages and other debt into retirement.

This is bad news for older Australians.

Reverse mortgages can be a useful tool to help you stay in your home, but there are also a number of risks involved. Make sure you understand all the pros and cons before making a decision.

In this blog post, we’ll cover the basics on what you need to know about reverse mortgages in Australia, including how they work, the benefits and drawbacks, and whether or not a reverse mortgage is right for you. Keep reading to learn more!

How does a reverse mortgage work?

Many retirees who own a home that has soared in value find they are asset rich but income poor. 

Unlike a traditional mortgage, a reverse mortgage is a type of equity release product (ERP) that allows Australians over 60 to borrow money by using the equity in their home as security for the loan. With a reverse mortgage, you can choose to receive the funds as either a lump sum, a regular income stream, a line of credit, or as a combination of any of these options.

Because the loan doesn’t need to be repaid until all borrowers on the loan have either died, sold the house or moved into aged care, a reverse mortgage compounds the interest charged. This means the balance of the loan will continue to increase as the interest builds up.

Reverse mortgages are complex financial products

If you’re considering a reverse mortgage, make sure to speak to a financial advisor to see if it’s the right solution for you. While a reverse mortgage may cover your immediate expenses, you need to be aware of the long-term risks of the loan. Many people who take out reverse mortgages aren’t aware of those long-term risks.

According to regulator ASIC

“Borrowers had a poor understanding of the risks and future costs of their loan, and generally failed to consider how their loan could impact their ability to afford their possible future needs.”

Before taking out a reverse mortgage, it is important to understand the impact it could have on your financial future and your retirement.

 Moneysmart warns a reverse mortgage can impact your eligibility for the Age Pension, your capacity to afford aged care, your ability to pay for future expenses, the money you leave to loved ones when you pass away, and whether or not someone who lives with you can keep staying in your home when you move out or die.

There are a few things to consider before taking out a reverse mortgage.


If you’re considering a reverse mortgage, make sure you understand all of the risks involved. If you or someone you know is considering a reverse mortgage, we strongly urge you to seek professional financial advice first.

Want to know more about reverse mortgages?

ASIC’s MoneySmart website is a great resource to find out more about reverse mortgages, including a Reverse Mortgage Calculator to help you work out how much equity you may have in the future.

Visit the Australian Securities and Investments Commission’s free consumer website at www.moneysmart.gov.au


When the Reserve Bank of Australia raises interest rates, it’s big news.

For the fifth time in a row, the RBA announced on Tuesday an increase to the official cash interest rate by 0.5% to help fight inflation and keep price growth under control. The 2.25% in interest rate increases since May are the RBA’s sharpest rate rises since 1994.

Why are interest rates rising so rapidly?

After a few decades of relatively stable inflation, consumer prices have been sharply increasing in 2022. A year ago, the Reserve Bank of Australia was forecasting that inflation for 2022 would be around 1.75%.

The latest Australian Bureau of Statistics (ABS) CPI figures reported that the annual Australian inflation rate is 6.1%, which is the highest recorded since 1990. Now, Australians are facing the prospect of CPI inflation reaching a peak of 7.75%, or more.

This is a very big forecasting miss. Even according to Philip Lowe, RBA Governor at the Inflation and the Monetary Policy Framework speech on 8th September 2022:

Forecast misses of this scale should lead to soul-searching by forecasters and they certainly have at the RBA. It is important that we learn from this and improve our understanding of the inflation process.

The RBA has responded to inflation in the same way as other central banks have around the world: by raising interest rates.

Why is high inflation so bad?

When inflation is high, it eats into household budgets and can lead to higher mortgage repayments and other household debt repayments, which can in turn lead to decreased consumer spending and confidence.

As Philip Lowe put it this week:

High inflation is a scourge. It damages our standard of living, creates additional uncertainty for households and businesses, erodes the value of people’s savings and adds to inequality. And without price stability, it is not possible to achieve a sustained period of low unemployment. It is important, therefore, that this current surge in inflation is only temporary and that we once again return to the 2 to 3 per cent range.

How do interest rates affect inflation?

Inflation is determined by many factors including economic growth, unemployment, wages growth and money supply. To control inflation, the RBA uses monetary policy tools including changing the cash rate –which is what has happened on Tuesday.

Banks borrow money, sometimes from each other, to make loans to consumers and businesses. So when the RBA raises its cash rate, it raises the cost of borrowing for banks that need funds to lend out. Banks naturally pass on these higher costs to consumers and businesses. A rise in interest rates makes borrowing money more expensive and this usually leads to slower economic growth and increased unemployment as companies cut costs by shedding jobs.

When interest rates are lower and more people are borrowing money cheaply, there is a greater supply of money in the economy. When the RBA raises interest rates, it means the money supply circulating will start to decrease.

How high will the RBA raise interest rates to combat inflation?

The short answer; as high as necessary.

The Board expects that further increases in interest rates will be required over the months ahead… But how high interest rates need to go and how quickly we get there will be guided by the incoming data and the evolving outlook for inflation and the labour market.

Inflation is about to be reported monthly

On 26 October 2022, the ABS will commence publication of a monthly CPI indicator.

Until then Australia has been the only member of the G20 leading industrial nations not to provide monthly CPI updates, and one of only two members of the Organisation for Economic Co-operation and Development, the other being New Zealand.

With the RBA meeting monthly, it makes much more sense to release CPI information monthly, rather than the usual 3 month lag.

Watch this space.



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