Get kids involved early to give them financial skills to succeed
When you complete almost all your purchases with a wave of your credit card – or even phone – it can be hard to explain the concept of money to your kids.
But parents are being told the earlier they can help their children get to grips with financial matters, the better off they will be.
Julian Wilson, programme manager of ASB GetWise, a youth financial literacy programme running in primary and intermediate schools around the country, said many kids did not understand some of the most basic ideas around money.
"The concept of what an amount of money is is lost on them," he said. "One hundred dollars seems like a lot of money – that might buy them a brand new boat or a house or flash car."
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Others saw money as an unlimited resource that was available any time a parent reached for a credit or eftpos card. "They never see the downside of that."
One student he dealt with thought her parents were being paid by the supermarket every time they presented their credit card at the checkout.
Jose George, Canstar general manager, said research from the OECD showed that young people today have lower levels of financial awareness than earlier generations.
"Yet, post global financial crisis, the financial environment we live in is far more layered and complex than ever before. Couple this with our desire to access everything in our lives, including money, in an instant, and the need for financial awareness becomes crucial if we are to make responsible life shaping financial decisions," he said.
Parents should not think that because they were doing their banking online and their shopping on credit cards, they could not get their children involved with the financial matters of the household, Wilson said.
"Parents should talk about money with their kids at every opportunity," he said. "Talk about what you are doing with your money, how bills work and the fact the money is coming out of your bank account. It helps give them a sense of perspective."
Children should also be encouraged to split their own pocket money into an amount for spending straight away, an amount for saving and an amount to "share" with others, by donating to charity or helping other people in some way.
"That's a great lesson, thinking about people other than themselves, because kids do think about themselves a lot."
But he said the more children got used to talking about and handling money, the more likely they were to understand it earlier, which would enable them to make better decisions as they grew up.
George said parents might find it easier than they expected to give their kids financial insights.
"We deal with money every day and simply including the kids in the weekly shop, giving them money to buy the milk at the dairy or reminding them that turning on a light costs money, can instil a sense of worth and value."
George said some of the banks had useful tools to help with this – ASB's Clever Kash is a cashless money box that helps kids see their savings balance grow.
Wilson said it was also important that children got a good understanding of physical money, too. "If they don't see it, they don't know what it's all about."
Canstar gave ASB its 2017 junior banking award and Westpac its youth banking award.