Nobody wins when the kids just get handouts
When my mum left home she did so with a sense of absolution. It was 1982, she had just finished school and moved cities to train for her future career.
Her visits home were minimal, and her financial responsibilities were her own. Support was given in the form of advice on how to fill out a cheque, and the occasional care package if she was lucky. To all, it was clear a ripcord had been pulled.
As for my dad, he left home around 15. Also absolutely, but slightly more abruptly, he was forced on to his feet financially. For him there was no budgeting advice, care packages, or visits home.
I contrast these experiences to the financial ejection process of today for New Zealand’s young adults. I can’t help but think that overall, they feel a little more of a light touch than that of the previous generations.
At face value, this could be seen as progress. We can protect them from mistakes that see them disadvantaged in the long run. We can ease their financial-hardship exposure with a slower decoupling from the family finances. Everybody wins. Right?
No. Actually, nobody wins. Given what I do professionally, it’s obvious I’ll always advocate teaching young adults about money, but my stance on this runs deeper than my world of in-school financial education. I’ve come to realise that unless this is discussed and reinforced at home as well, we could take a massive step back in the coming years.
Having just officially launched throughout high schools with Banqer High this term, 2019 meant spending a lot of time with New Zealand teens (I now have TikTok to prove it). For the last five years I’d been convinced that school was enough to save the next generation financially. My hope had been built up through magical conversations with 10-year-olds who confidently nattered on about mortgages, interest rates, and insurance premiums.
My experience in high schools was different.
Consumed by consumption and chasing clout, this cohort are very engaged with the financial world, but lacked the comprehension we’d been nurturing in their younger counterparts. Generally speaking, across the board financial comprehension was low, and there was a shyness, or lack of interest about discussing money-stuff.
When I map that to the behaviour of my own generation I see an alignment. We’re that apathy in action a few years down the track, a few more credit cards under the belt. A generation where not all, but many, are yet to pull the financial ripcord.
Family financial education and support is unique to each family. There are a tonne of considerations, including a family’s ability and willingness to extend support, cultural norms, and a bunch of psychology that I’m far from qualified to speak to.
At the crux of it though, a financial support spectrum will always exist; at one end, those like my dad, in complete financial solidarity from a young age, and at the other, trust fund babies (yes, they exist in New Zealand).
There are many more in the middle who could support themselves but for whatever reason don’t.
I can rationalise how the financial support of young adults has increased. I’m not a parent (which I am reminded of when offering parenting advice to my sister) but I can understand it would be tough to see your child, even in their 20s, struggling in an increasingly complex financial world. It would be tempting to take the path of least resistance. To top up their phone or their bank account; to help them into their first flat.
It’s a slippery slope, where a reasonable safety net ends up becoming a capability restraint. In reality, what we think is financial protection and support is instead stripping our kids of so much; the opportunity to gain the skills they need to navigate our society. The chance to make small, manageable mistakes that will translate into rich financial experience to draw on later.
Without these, the real consequences could be drastic in the future. The potential mistakes get bigger.
Thankfully there is an alternative and it doesn’t require your child leaving home at 15, or only sending them an annual care package. The ultimate handout is financial preparation and financial responsibility; the skillset to face the financial world.
By this I mean let your kids fall financially and dust them off. Support their in-school financial education with open and honest communication. Let them feel a little bit of pain now.
I understand this is a confronting suggestion. It’s easier to just cover rent this week than sit down and help them prepare a CV, and run through time management skills so they can get a part-time job and focus on studies. Discuss managing stress, a weekly budget, and help them develop the ability to delay gratification and distinguish between a need and a want (so you’re not paying the rent to allow them to purchase some new shoes).
If we can make the change needed we’ve got a real shot at changing the course for Aotearoa at large. A generation of financially empowered Kiwis who know how to make their finances work for them is something worth fighting for. It’s worth a little pain today.
Banqer is a financial education app aimed at young people