Teach your children financial literacy
I remember pocket money. It was doled out each week, ostensibly in exchange for the completion of various chores, and it was either frittered away or, towards the end of the year, saved up to buy Christmas presents. When I started doing paper rounds and the like, it seemed to stop coming. Canny dad. The savings and retirement commissioner says it’s becoming even more important that young people learn how to manage money, as they’re likely to leave tertiary education with big student loans, change jobs frequently and have to know how to choose between a range of financial products and institutions. The commission’s sorted.org website includes financial concepts for kids, based on what the Enterprise New Zealand Trust has learned running financial education courses in schools. A good start is encouraging your kids to save for things they want. Try to make it fun – consider incentives and rewards, but do what you feel comfortable with and can afford. Everyday encounters, such as visiting a money machine or opening bills, can be turned into informal lessons to help kids learn about money. Don’t ever assume kids will pick up the facts on their own. Kids need to know you can earn interest by saving, and that you pay interest when you borrow.
Encourage your kids to be aware of the how they relate to money – are they spenders or savers? Different personalities may require different approaches.
The Sorted website includes a money personality profiler where kids can see whether they are a Savings Superstar or a Money Magician. Talk about money with your kids. Answering questions like “Why can’t I have one?” can be valuable lessons. Be consistent. If you’ve made a rule about money, stick with it. Encourage your kids to keep written records of income and expenditure. That habit of book keeping will help later.