Teach your chil­dren fi­nan­cial lit­er­acy

Element - - Finance - Adam Gif­ford Per­sonal fi­nance

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.

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