Julia Schortinghuis says it is harder today for kids to understand money.
Teaching our kids about money and being financially responsible is no doubt important for all parents. The million-dollar question is, “How on earth do we engage our kids in a meaningful way that will get them to stop and learn?”
I recall as a very young child shopping with my mum in Boans on the Hay Street mall, where she was deliberating over whether or not she could afford to buy a dress she wanted.
I piped in and suggested she just “write out one of those paper things and give it to the lady — then it will only cost 10¢ ...” With a puzzled look my mum paused and then questioned me further.
“Are you talking about me writing a cheque?”
“Yes,” I replied, feeling very clever that I had found a magic way to get whatever you want. As my mum pulled out her cheque book and saw “stamp duty 10¢” written across the middle, the penny dropped.
Today is no different. Parents have magic cards that tap on machines that pay for everything. As technology evolves it gets easier and easier — we can even pay with our phones. How easy it that.
At least in my childhood we got to see the physical handling of notes and coins so the connection was far more obvious.
I think it is much harder for kids today to get a real-world grip on what money is, let alone learning the necessary skills to handle it well.
So whose job is it to teach our kids about money? I have often lamented that there should be a greater emphasis on financial literacy in schools. This does not mean, however, that parents should be handing over responsibility.
The truth is that it needs to come primarily from the family home and then be supported by school. I have discovered that in recent times, financial literacy is getting far more emphasis and increasingly being embedded in school curriculums.
My 14-year-old son came home with a school project last year that was just brilliant. His teacher had shared with the class what he was earning as a teacher and that he, his two small children and his wife, the primary carer, really wanted to go on a holiday overseas. The students were tasked with the job of going away to plan the holiday. The rules were that the family had two years to save, the holiday had to be overseas (anywhere) and had to be paid for from savings.
While initially thinking this project was pretty straightforward, my son set about planning the holiday. Researching destinations, hotels and places to visit seemed like a pretty simple task. I wandered in to ask how he was going and he reported that he was pretty happy with his progress and thought he would nail it within an hour.
After asking him how he knew that his teacher could afford this holiday he told me that he was earning a lot of money so it should be easy and he had two years to save for it.
Deciding that he should test that theory, he started working through the ASIC MoneySmart Budget calculator. The reality of the situation then set in pretty quickly.
That is when the questions started. Mum how much do we spend on groceries each week? How much would rent be? Electricity, gas, water, internet, mobile, pay TV, transport, car insurance, home insurance, health insurance, personal insurance, medicines, dental, restaurants, movies, petrol, car servicing and licensing, local gym membership, babysitting, clothing, lunch out, Christmas presents ... and on it went. What about funds in case of an emergency? The budget fell into negative.
You could sense that my son felt there was nothing extravagant about this lifestyle at all. Why then did the budget go into negative so quickly?
Suddenly the “big salary” didn’t seem big after all. After ruling out the possibility of even a “cheap” trip to Bali you could sense this was feeling like an impossible task.
It was concluded that the teacher couldn’t afford to go away with his family. Ouch.
Tackling it again the next day, the light bulbs started to go off. If he REALLY wants to go on a family holiday then he will have to make some changes.
If my teacher makes his lunches rather than buying them three times a week, limits takeaways, going out to restaurants or the movies to once a month (you still need to live a bit), that has the added bonus of dropping babysitting costs. The budget moved into neutral — still not enough. Pay TV had to go — now that was a struggle. Getting there now ... but not quite.
The next day, more light bulbs — my teacher needs to get a cheaper rental he mused. Jumping onto the internet to research the cost of renting further away from the school was going to save another $50 a week ($2600 a year. Ka-ching. Almost there, but transport costs will go up? Nope — he’s now riding his bike to school which will save on the gym membership too.
The next day coming home from school, “Good news mum, my teacher gets Family Tax Benefits so they can now go somewhere really nice”.
As I sit here typing this from overseas at the conclusion of our own family holiday, I can confidently report that this holiday is not taken for granted and indeed is greatly appreciated.
One small step for man. The next time your family is thinking about going on a holiday — maybe, just maybe, the whole family can get on board.
Julia Schortinghuis is a financial adviser for Lighthouse Capital