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.
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.