As my daughter went through her childhood, I unflinchingly exposed her to the power of spending but kept other important aspects like earning and saving unknowingly hidden away. This created an unrealistic impression that my flashy silver (credit) card magically paid for all her heart desired.
It is now time to teach her some life lessons on money…
There are many approaches a parent can take, some feel that leading a disciplined and frugal life is the right way to teach them the value of money. Other parents reward with cash or treats for good behaviour or teach them the concepts like earning and saving.
Experts say that there is no right or wrong way of teaching the value of money and if parents keep relating everything to money that the message will travel to the child.
Teaching children about money can start as early as six or seven years old, even if it is just a piggy bank and they are encouraged to save for something they want.
This can then move on to opening a bank account and eftpos card at age 13 (or older) and allowing them to handle their own money and track their expenses.
At around 16, as they grow into young adults, encourage them to look for a part-time job. With the money they earn, teach them financial management skills such as budgeting, investing, inflation and the power of compound interest. Talk to them about KiwiSaver and the importance of saving for the future.
Most financial institutions claim that our young adults only believe in spending and are not interested in saving. They say young adults today are influenced by social media and advertising, that focuses on living the good life and instant gratification. It is for this reason that financial literacy needs to start early on in life; the earlier you start the sooner they will have good money habits.