I’ve always loved to shop. I started working when I was 16 so have always had a little spending money. When I got to uni I got my first credit card. What kind of bank would give a shopaholic university student a credit card? One that wanted to earn a crap load of interest from me, that’s who. Luckily I didn’t get in to too much trouble – I still have a good credit score and I’ve never filed for bankruptcy, ha ha. Over the years I’ve become more financially literate but, as I found out last week, there’s a big difference between being financially literate and financially capable.
On a rainy winter’s night a girlfriend and I escaped the kids and headed out, not for a wine, but to hear Hannah McQueen speak on “How to Raise Financially Independent Kids.” We piled in to my old high school auditorium (somehow it’s shrunk!) and sat with other parents intent on figuring out how on earth to give our kids the support they need to get ahead financially. I know, I know, my boys are way too young to be worrying about this sort of thing, right? Sure. But it’s not too early to start changing my mindset when it comes to finances and how I teach my two.
This wasn’t the first time I had seen Hannah speak. Exactly one year previously, to the day, I had seen her speak at the Chartered Accountants Australia and NZ Women in Business Conference in Christchurch. That session was all about how to kill your mortgage and sort your retirement. It was a really interesting session although she was a little heavy on the “buy my book/book a session with my financial personal training business”. I was expecting the same sales pitches this time round but I was pleasantly surprised.
Hannah started the talk by setting the scene – painting a picture of the financial climate our children are growing up in – a bit of a reality check. Gone are the days of simply getting a job, any kind will do, working hard until retirement age and having everything work itself out. Home ownership is getting less and less attainable. Huge student loans are not just acceptable but pretty much expected. And we tell our kids they can be anything they like, the world is their oyster, follow their dreams and it will all work out – but will it?
Imagine being just 17 years old. You’re told you need to make a decision that will effect the rest of your life – you need to decide what your future will look like. What type of job do you want and are you prepared to be tens of thousands of dollars in debt when you set out to find that job? That’s what it is like leaving school and heading off to uni. This really hit home for me. I look back at my choices at that age and I wish I could do it all over again. I still have a student loan almost 10 years on. It impacts my family finances. I had no idea what I was doing when I chose which qualifications to study and I wonder how different my life could be if I had more understanding about how those choices would effect my future. Of course I love my boys, my hubby and my life but could I be more comfortable financially, have a more fulfilling job – food for thought.
Hannah broke things down in to the ages from 5 until the time your kids leave home and gave clear objectives for each stage – this planner in was in heaven. She covered everything from pocket money to how to talk to your children about money, part time jobs and goal setting. The key takeouts that stuck with me:
- Trust your children enough to have open and honest conversations about the family finances. Tell them what you earn, what things cost, show them the bank statements.
- Pocket money should be earned, not just given. There are some chores that are simply part of being a family member – these are not paid. Then there are optional chores that can earn pocket money. And it should be relative to their age – one hour of chores for a 5 year old earns 5 dollars. This should be paid in cold hard cash not an IOU or a transfer to their bank accounts – pocket money should be tangible.
- From age 10 kids should be given a ‘living allowance’ – giving them some financial responsibility e.g. here is $x to pay for your haircuts. This is paid monthly and there can be rules but it gives them a chance to start to practice financial independence. What happens if they blow their cash too early? Let them find out.
- Part time jobs are non-negotiable. From 16 kids should have some form of part time job – an employer, responsibilities, expectations and an income. And the employer shouldn’t be a family member or close friend.
- Everybody – kids and parents – need to understand what their financial personality is and how this effects them. Are you a shopper or a saver? What does that mean for you?
- Have realistic conversations about their future. It is all well and good telling your kids to chase their dreams but what will this do for them financially? What is the average salary for their dream job and will this afford them the lifestyle they want?
Heading out on a winters night for an evening without a wine in sight was worth it. I feel I got a lot of great pointers for when the times comes to start conversations on finances with my boys.
I haven’t yet read Hannah’s book, Pocket Money to Property, but I think I will grab a copy and stash it away for future reference.
“The difference between us and them is that we can’t afford for them to not master money. We need our kids to be purposeful around this. Money shouldn’t be feared, and it shouldn’t be revered, but you need to be in control of it.” Hannah McQueen, Enable Me.
How do you handle pocket money in your house?
*This is not a sponsored post or advertisement. These views are my own and I don’t benefit in any way from the purchase of Hannah’s book.