Our ageing population means today’s students face a different future to their grandparents – when these young people retire, the ratio of New Zealanders aged 65+ will be 1:4. It’s expected there will be only 2.5 workers for every retiree, which means young people today need to reach retirement in good financial shape so they can support themselves.
- Education gazette, @ education.govt.nz
So what can we do to foster financial capability in our kids? Here are our top 3 tips for this week:
1 - Link jobs to earning opportunities
By creating an incentive to get the work done, and giving them the feeling of earning some money, you can make the routine household chores easier, with less arguments and cajoling. So that’s a win/win. Hands down, this approach is far superior to unlinked, random rewards, like ad-hoc pocket money.
2 - Allow them to spend
Cashflow is an important concept to grasp. When I first set up a bank account for our eldest, she was steadily earning money and putting it away, but with no goal in mind. Add to that the fact her earnings were transferred electronically, and the whole concept remained abstract. She knew there was this thing called money and a thing called a bank, but it was in the same realm as the tooth-fairy. By connecting the dots and allowing her to spend some of that hard-earned digital money, she’s steadily forging the psychological correlation between effort and reward, and really getting to grips with the true value of a dollar, and her time.
3 - Teach the value of saving up for something, and the ability to delay gratification
Spending is necessary, and, like all good things, in moderation. Delaying gratification is hugely important in other areas of life too, not just in financial terms. By instilling and reinforcing the value of saving toward a goal, we’re teaching delayed gratification, and helping them get the feeling of achievement that comes with working towards, and hitting a target. This is hugely valuable in their development.
SquareOne believes that when our kids can succeed, the future of Aotearoa, and the world, gets better. That’s why we take all of these concepts and wrap them into the app, to facilitate accelerating your kids’ financial capability… And increasing the likelihood they’ll retire in comfort.