It’s Money Week in New Zealand, and the word on the street is that we’ll need $4,000 in retirement just to spend on eggs! Time to get some chickens we think. Part of retirement planning is growing a savings habit, and that can start at a very young age. Vinessa tells us more about what kids need to know.

Just the other day, my daughter Olivia who is 9 years old, said to me, “Mummy, you know how I spent $2 at the market last Sunday”, I said “Yes”, “well” she said, ” I put the remaining $3 in my money box”.  “Good girl”, I said all the while feeling pretty pleased that she had taken on board what I had told her about pocket money: “Spend some, save some”.  She’s saving for an iPod Touch.

Financial Literacy is something that impacts us all!  The Ministry of Education is responsible for financial literacy in NZ schools.  Financial Capability (aka financial literacy) is highlighted in the New Zealand curriculum.  Teaching is supposedly via a cross curricular approach – that is, financial literacy is not a core subject in itself, rather it is integrated into other core subjects such as English and Maths and Social Sciences.  There is plenty of material available to schools to use if they choose to teach it.  However, I believe parents should also play a role in teaching their kids about money.

So what do our kids need to know and what should we be doing to support their learning?

My view is, in the first instance we should be teaching them about delayed gratification.  I know there are many people out there who would rather buy now and this is invariably done through racking up debt.  But where does that get you?  If not managed properly, you can get yourself in a whole heap of trouble fast.  We can teach our kids that sometimes it is better to wait and get what they really want rather than settle for something for the sake of having it now.

According to a study done in the late 1960s and early 1970s by Psychologist, Walter Mishcel, (the Stanford marshmallow experiment) children who were best able to delay gratification did better in school and had fewer behaviour problems.   And, by learning to delay gratification, (aka impulse control), this important skill may help us to have a satisfying and successful life.

So, how do we learn to control our impulses?

The strategies used in Mischel’s study, focused not on resisting the urge to eat the marshmallow, but rather to distract ourselves from the urge itself.  Translating this to a financial context, perhaps your child may wish to buy something with their pocket money now, but rather than resist the urge to spend their money, they may distract themselves by seeing just how big their bank balance is growing and be encouraged to continue to save for their long term goal.  For my daughter, I know she’s very excited to see that her bank balance has now reached $50.00.  She’s closer to her ultimate goal and doesn’t want to touch it.

Then there is the issue of teaching your child the value of money.  Have you ever taken your child to the mall and they want an ice-cream and they want a new toy etc.  When it comes to teaching our kids about money, it’s about helping them learn in a real life context and this example provides the perfect opportunity to teach.  You could say to them, “Yes, you can have an ice-cream, you have your own money, but if you decide to buy an ice-cream, you won’t have enough money left to buy the toy”.  Once they learn that they don’t have enough to buy both items, they then need to decide what is more valuable to them so that they can make an informed choice.

Financial literacy is defined as the ability to make informed judgments and effective decisions on the use and management of money.  Using the above example, parents will have many real life opportunities to teach their kids how to make informed decisions when it comes to their spending habits.

My daughter also had some experts come into her school recently.  They covered topics like interest: what is good interest and what is bad interest, what is a credit card, eftpos card, debit card, etc.  She came home with lots of questions which was fantastic.  Between parents and school, kids need to know this stuff.

What does a financially capable individual look like?

A couple of thoughts that fit into this would be someone who has developed knowledge and understanding of financial information and processes that have an impact on daily living (examples may include, interest rates, and taxation); as well as personal financial management that enable sound decision making about financial activities (examples may include, teaching our kids about income and expenses and how to budget).  As parents, we can start by teaching our kids now and who knows, by the very mere act of teaching our kids awareness of this financial stuff, we may learn a thing or two ourselves.


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Vinessa is passionate about assisting clients to achieve their financial goals. This passion, combined with specialist financial qualifications, and years of work and life experience makes her eminently qualified for advising families and individuals on the most appropriate way to protect assets and build wealth. Vinessa is married to Graham and together they have two boys and one daughter, Marc, Liam and Olivia. Disclosure and Disclaimer: A disclosure statement is available on request and free of charge. While every care has been taken to supply accurate information, errors and omissions may occur. Accordingly, Milestone Direct Ltd accepts no responsibility for any loss caused as a result of any person relying on the information supplied

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