It’s Money Week, so we asked a couple of financial education experts what lessons parents should, and shouldn’t, be teaching their kids about money.
First up is Dr Pushpa Wood, Director of Westpac-Massey University’s Financial Education and Research Centre, who works to help New Zealanders become more financially savvy by improving their knowledge, attitudes and behaviour towards money.
She has one overall tip for parents: “Be a good role model for your children!”
Pushpa believes that if we teach our kids these skills while young, we can put them in good stead for their financial future.
Here’s her Do’s and Don’t’s for teaching your kids about money. Come back on Wednesday for the next instalment.
Teach them to save up for what they want. Teaching this principle from an early age will go a long way in their life.
Teach them how to use money
If you give them pocket money (you don’t have to but if you do) – teach them to manage it by dividing in three parts – one part for spending, one part for saving and one part for giving (giving could be to a nominated charity, for a school fare, fundraising event in the community or helping someone they think deserves their help). This one discussion point teaches them a number of life skills.
Include them in money talks
Involve them in setting the household budget, preparing grocery shopping list and then ask for their help in shopping within budget. Take a calculator so they can keep track of spending and keep the shopping on budget.
Their reward – if there is any saving, they get to spend that money on what they WANT. This activity alone will kill quite a few birds with one stone.
Give in to demands
Don’t fulfil all their demands even if they throw a tantrum! Try and distract them and when they have calmed down, you can explain to them why they can’t have everything they want and when they want. Teach them the importance of living within budget.
Give them money without a goal
Don’t just give them the pocket money without having some conversation about things like how are they planning to spend it and how much will they be putting aside as saving for something they want.
Keep them in the dark
Don’t keep them in dark about your finances and mysteries of how money works. Don’t let them keep thinking that money comes out of Money Machine!
Dr Pushpa Wood has a long history of adult and financial literacy advocacy. She was previously the Education Manager at the Commission for Financial Literacy and Retirement Income.
She has worked across the school, tertiary, and industry sectors to improve adult literacy and financial literacy, and is a member of the New Zealand Qualifications Authority’s project advisory group reviewing financial literacy unit standards.
She is also a member of the Advisory Council for Financial Dispute Resolution Service. Dr Wood has extensive experience in developing teaching and learning resources, training and development and stakeholder relationship.
Her research interests include identifying trigger points that motivate people to change their financial behaviour and testing culturally appropriate evaluation tools.