Teach­ing kids to be fi­nan­cially smart

The three Rs are still vi­tal but kids need to be taught about fi­nance as well, says Erin Reilly.

The Tribune (NZ) - - BACKYARD BANTER -

When I was a kid, life was sim­ple. We lived on a farm; my par­ents had fairly sta­ble jobs; my brother and I ran around out­side bare­foot and care-free; we did odd jobs around the house in ex­change for pocket money; and it was al­ways a given that we’d fin­ish high school, go to uni, and ‘‘get a good job’’.

Money wasn’t re­ally talked about (other than not spend­ing heaps), and I don’t re­mem­ber ever talk­ing about buy­ing a house or in­vest­ing in the share mar­ket.

But now in an econ­omy where you need more than a mil­lion dol­lars to buy a do-up­per, it’s re­ally got me think­ing about my son’s fi­nan­cial fu­ture.

Re­cently I read that the day ‘‘rich kids’’ get their first job de­liv­er­ing pam­phlets or pack­ing shelves, they’re en­cour­aged to save half of what they earn. By the time they reach their mid-20s, tens of thou­sands of dol­lars are sit­ting there, ready to be spent on house de­posits and in­vest­ment port­fo­lios.

I don’t know if this is ac­cu­rate of all ‘‘rich kids’’ or even if that gen­er­al­i­sa­tion is re­motely true, but it’s pretty wise ad­vice for any par­ent to in­stil into their kids early on. If we want our kids to live com­fort­ably in 30-odd years, teach­ing them the value of sav­ing and in­vest­ing now ver­sus re­ly­ing on hand­outs and help-ups is in­valu­able.

What kids can be when they grow up has changed dra­mat­i­cally since I was a kid too. Op­tions are no longer lim­ited to tra­di­tional oc­cu­pa­tions like nur­sing, law, teach­ing or law en­force­ment. In fact, ac­cord­ing to the Small Busi­ness Sec­tor Re­port 2014, work­ing for your­self is be­com­ing in­creas­ingly pop­u­lar, with 460,000 small busi­nesses on New Zealand’s books, 326,000 of which are one-man bands – that’s al­most 70 per cent of all Kiwi com­pa­nies.

En­trepreneur­ship is a le­git­i­mate sub­ject to study at school, yet ed­u­ca­tion still re­volves around the three Rs: Read­ing, wRit­ing and aRith­metic. Of course they’re es­sen­tial, but so is learn­ing how to bud­get, to put to­gether a CV, to pre­pare for a job in­ter­view, to in­vest. Ar­guably even more im­por­tant is learn­ing how to think out­side the square, to dream big, to be­lieve in and back your­self, – all of which con­trib­ute to the def­i­ni­tion of en­trepreneur­ship, and all of which are es­sen­tial to suc­ceed in the cut-throat busi­ness world.

New Zealand ed­u­ca­tion is great, but if your kids aren’t learn­ing prac­ti­cal fi­nan­cial knowhow they can ap­ply to the real world, maybe it’s time to think about com­ple­men­tary ed­u­ca­tion. Sug­gest adding a weekly busi­ness­fo­cused life skills class to your lo­cal school’s cur­ricu­lum, or if you’ve got a suc­cess­ful busi­ness back­ground of­fer to teach it your­self. If your school isn’t keen, start your own money man­age­ment course for kids and spread the word on Neigh­bourly.

The more we set our kids up to suc­ceed now, the eas­ier their lives will be when it comes time to buy houses, set up busi­nesses, travel, fund spe­cial projects – in fact, any­thing that re­quires dol­lars. All par­ents want the very best for their kids, and it starts with teach­ing them fi­nan­cial wis­dom.

The more we set our kids up to suc­ceed now, the eas­ier their lives will be when they leave the nest.

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