Top tips to get kids on path to financial success

It's still possible to teach kids valuable financial lessons, even if you don't use cash.

It's still possible to teach kids valuable financial lessons, even if you don't use cash.

It's only natural to want your kids to have all the tools they need to succeed in life.

Key among those is the ability to manage money well, avoid dumb debt and save – whether it's with a particular goal in mind or just for a rainy day.

But what can you do to instil those skills in your kids if you are not confident that you have them yourself?

Pocket money

If you give your kids pocket money, put it to good use. David Boyle, group manager of investor education at the Commission for Financial Capability, suggests putting half into a savings account and giving kids half to spend. "That means they get a sense of the value of the work they have done to earn it but also see savings."

READ MORE: Parents can help entrepreneurial kids become start-up success stories

As well as asking them to perform chores for their money, encourage them to come up with ways that they could earn it. There are a number of apps that are designed to help kids learn through their pocket money. Pocket Money is one that works via the cloud to help kids learn simple banking techniques and track their spending. There is a free or a paid version. ASB is also set to offer Clever Kash, a virtual piggy bank for kids.

Bank accounts

The days of counting coins are over for most families. Claire Matthews, a banking expert at Massey University, said it was common for households to have very little cash. "That means you're going to have to teach your kids about money without cash which can be a bit more challenging. You have to do it in an abstract way."

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But she said there were also benefits to that. Kids who were given pocket money by direct transfer into their bank accounts could see the value of having money in there, earning interest. "They get the interest for the money in the bank and that's a good lesson. They see the more money they have, the more interest they get."


Get kids to set some savings goals, whether it's buying a new toy or having spending money for a holiday. Boyle says this is a good way to teach them to save first rather than just ask for things. Writing the goals down will help them get used to prioritising and determining what they need to set aside to reach a goal.


Every so often you may have to lend your kids money. Matthews said it was a good idea to ensure that kids always had to pay their loans back. She said parents could charge a token amount of interest so their children could understand that there was a cost associated with borrowing.

Talk about money

Involve your children in your household discussions and financial decisions. Boyle says: "This is the most important thing, I think. Buying in bulk, saving a little over a long time, even everyday discussions around why you bought the plain brand compared to a big brand item."

Matthews agreed: "You don't necessarily want to tell them what your wages or salary are, but if you talk to them about the choices you're having to make and involve them in those choices, it's a good idea. If you're deciding between a holiday or going to the movies every week, you can show them that you're putting that money aside and how it is building up. Involve them in choices and decisions at a family level. You don't necessarily need a whole lot of knowledge, it's just showing them how the decisions are made."


Even though there is no longer a $1000 kickstart incentive to get people into KiwiSaver, Boyle said there were still  benefits to young people joining. He said it was a good way for parents to show their kids money accumulating and also give them a taste of how financial markets worked. "And as they get older, you know it's safe from any other spending other than going to their first home." 

Another option is a managed fund, which offers more freedom when it comes to withdrawals but can require bigger minimum contributions than KiwiSaver funds. "Kids understand pretty quickly the value of money. If they can see fluctuations in the market, it's not a bad tool to get started."

 - Stuff


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