Children should be taught at home about managing money
MONEY behaviours begin at home so to protect your child’s future you should teach them about finance and not leave it to school, writes Barefoot Investor.
Barefoot Investor
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MOST Aussie parents (62 per cent) believe that their kids will be financially worse off than them.
That’s according to a study released by the Financial Planning Association of Australia (FPA) this week. Harsh!
Hand-wringing parent: “If only there was something I could do to save my child’s financial future …”
Barefoot: “Why don’t you talk to them about money?”
Parent: “Well … nah.”
PUT YOUR SUPER INTO BETTER SHAPE
TIME SPENT WITH FAMILY TRUMPS PRICEY EDUCATION
It’s true, the FPA study found that even more parents (68 per cent), are reluctant to talk to their kids about money.
Why is that? Well, I think it’s because many parents don’t feel they have the confidence to talk about it.
According to the Australian Bureau of Statistics, 44 per cent of us lack the financial numeracy skills to function on a day-to-day level. I’m not talking about busting out a spreadsheet … I’m talking reading a pay slip, or calculating a basic percentage.
It would be incredibly intimidating to talk to your kids about something if you weren’t taught it yourself (which is why most parents would rather talk to their kids about sex than cents!).
So the easy answer is to lump it on to schools, and on to teachers. It’s yet another thing that poor old Mrs Jones has to squeeze into her lesson plan: LGBTIQ understanding, ScoMo understanding, and now … financial literacy understanding?
While I agree that kids should be taught about money in schools (in fact, I’m developing my own program to teach it), the truth is that money behaviours begin at home.
And that’s why I’ve centred my new book on learning about money around the family dinner table (a captive audience!).
The truth is, I believe that any parent is capable of teaching their kids the money lessons they need to know … which is why I’ve boiled them down to 10 simple, fun “moments” that any parent can do, at any income level, without the awkwardness of “money talk”.
Like what?
Like doing a family treasure hunt and selling off old toys the kids no longer use. Like putting on a dinner party, where they shop and then cook for their grandparents.
And like blending credit cards at the dinner table. (I’m serious.)
Kids learn by seeing, not by listening. I’m taking it one step further — to get them doing.
My book launches next month, and a copy will be donated to every school across the country (all 9393 of them!).
Tread Your Own Path!
TAKE A LESSON FROM BUFFETT
ROD ASKS: Given the way the Liberals have self-destructed this week, it’s looking increasingly likely they’re not going to be in office next year.
Yet the thought of Bill Shorten making it into office terrifies me. I am 54, earn $110,000 a year, and have an investment property. Should I be worried? How do I prepare?
BAREFOOT REPLIES: I wouldn’t advise basing your long-term investment decisions on short-term politics. (After all, the way Canberra craters, next year we could have Kyle Sandilands and his deputy Jackie O having a tilt at the leadership.)
A good case in point is Donald Trump, who the experts suggested would be a disaster for the US economy, and who has (thus far) proved everyone wrong.
Having said that, Labor’s proposed policies — restricting negative gearing to new properties, and halving the capital gains tax discount — will almost certainly serve up a short-term hit to our already fragile housing market.
A study from RiskWise Property Research and Wargent Advisory suggests Labor’s proposed policies would cause a 9 per cent fall in house prices in NSW and Victoria, 7 per cent in WA and the NT, and 6 per cent in South Australia and the ACT. That’s a guess, of course, but an educated one.
Investment legend Warren Buffett has said that he’s never based an investment decision on the current state of the economy, or on the politics of the day.
That’s because he knows that, over the long term, the future is incredibly bright.
INVEST IN CHILDREN
RICK ASKS: I have the CBA Youthsaver account for my two boys.
They’re not earning a lot of interest, and after ringing CBA I found that I need to be making regular deposits into their accounts to accrue the bonus and credit interest.
I have looked at investment bonds, but they require $100 a month and that is a bit hard for a sole average wage earner with a wife, kids, mortgage and bills.
Is there a better way to set my boys up, or am I missing something?
BAREFOOT REPLIES: Most kids’ bank accounts are marketing gimmicks.
Having said that, the best account is the CUA Youth eSaver, which pays a variable 4 per cent per annum on balances up to $5000.
That’s good for short-term saving, but you really don’t want to save long term for your kid in a bank account.
If you have a longer time frame (say seven years plus), you could invest in your wife’s name (the lower income earner) with an app like Raiz, where you can kick things off with a
few bucks, rather than the higher amounts you need for investment bonds.
Regardless of where you choose to save, the fact that you’re saving some money for your kids tells me you’re already on the right track: the No.1 predictor of raising financially fit kids is being good with money yourself.
LET THE WEEDS GROW
RENATA ASKS: I am very curious to know how you manage to fund the “maintenance costs” of being a woman!
Even low-maintenance women such as myself incur way more expenses than men.
I do not get spray tans, have my nails done or buy lots of clothes, but I do need salon hair colour, makeup, skincare, bras, clothing and waxing to keep me looking and feeling my best.
Hubby’s response is “you don’t really need that stuff”, but this is unrealistic. Please help!
BAREFOOT REPLIES: Well, this is a first — my wife has never had a question directed to her before.
So I read out your question, and here is her reply:
“Let the weeds grow, and see how your hubby likes that!”
(Only my wife could get away with saying that — I’d get hate mail for weeks.)
Liz and I share the same bank account and have a preset “no questions asked” amount we can spend.
When you’re sharing money it’s really important to have the freedom to spend money on whatever you want.
(Beside, I’m sure some of his expenses wouldn’t fit your idea of necessary either. “My shout, boys!”)
THE UNSUNG HEROES
TONI WRITES: I do not have a question but I just wanted to thank you for your support of financial counsellors!
They are the heroes of humanity in the financial sector. You have a big following and an influential voice, and it is a credit to you that you use it to give a financial shout-out to the people who willingly take on the giants of financial bullying.
A financial counsellor helped my parents in a way that I could never express thanks for — and that counsellor goes home with a pay packet that could never express her worth!
BAREFOOT REPLIES: I’m hoping that one recommendation from the royal commission is that more money is made available to get more financial counsellors on the ground.
The banks make a lot of money, yet it’s the financial counsellors who mop up a lot of their mess. Fingers crossed!
The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice
Originally published as Children should be taught at home about managing money
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