Teaching tamariki about whānau Finances

If you have children, it is a valuable lesson if you teach them about the value of money, saving and budgeting. This is a four-step whānau approach to money management to help you understand where your money goes.

Now, more than ever, is the time to teach our kids about how to become good money managers. We live in an age of consumerism where the dominant message is, "We want it and we want it right now." It is becoming increasingly difficult to control and make our money work for our goals.

By giving your kids a greater appreciation of whānau finances and working together to achieve financial goals, you are also teaching your tamariki good habits for the future, which they can pass on to their own children.

(1) Teach the whānau the value of money
Sit down as a whānau and write a budget. Work out how much money comes in to the household and how much it takes to cover all fixed expenses. If you have a computer, the Sorted website at www.sorted.org.nz has a good budget template that can be downloaded or you can request a copy from the Retirement Commission or the Ngāi Tahu Financial Independence Programme.

Make sure your budget includes costs such as school uniforms, school trips and eyeglasses so that your kids are aware of necessity spending directly related to them. Try to create a surplus by reducing costs where possible, but remember to allow for future expenses such as car registration and any expected annual bills. Hopefully, there is something left over for savings once all the bills have been paid. Discussing what it costs to run the household will help your kids better understand that you aren't just being mean when you say they can't have that new computer or that latest cellphone just like all their mates.

(2) Develop a whānau savings plan
 Talk with the whānau and identify some savings goals. Agree on short, medium and long-term goals for the whānau and for each whanau member. Then work out a plan of how you are going to achieve them.

Most financial advisers will say you should try to save around 10 per cent of your income in addition to your retirement savings. Savings should be kept in a separate account and not touched unless it's an emergency. The lesson for the whānau is you can spend some money now but it is also important to save some for later. If savings are put into a high interest or investment bank account they will also earn some interest, helping to grow your pūtea. Another idea is to sign your kids up to Whai Rawa, the Ngāi Tahu savings scheme. Have them make a regular contribution to their own accounts. They will also receive an annual contribution from Ngāi Tahu.

To learn more about Whai Rawa, freephone 0800-WHAI-RAWA (0800-942-472) or go online to www.whairawa.com. Give your kids a good old-fashioned "piggy bank" to collect their spare change, and encourage them not to touch it until they have saved enough to reach a predetermined goal.

For example, if they use it to buy that item of clothing, takeaways or a luxury in the short term, they will not be able to afford their bigger savings goal of buying a new iPod.

(3) Work with your kids to help increase the whānau income
Look at ways to earn some extra money. It could be pocket money for doing jobs around the house or doing odd jobs for friends, neighbours and extended whānau. Consider selling stuff you no longer need, such as clothes, toys or furniture. You can do this by having a garage sale or selling it on a website like Trade Me.

(4) Go grocery shopping as a whānau
Set an amount to spend on the weekly groceries and make it a whānau outing. It won't take long for your tamariki to realise that feeding the whānau is expensive. Take a calculator to the supermarket and add the prices up as you go.

Remember to take the coupons too. In the last issue of TE KARAKA we talked about saving money by growing your own vegetables. You could go one step further and make your kids responsible for looking after the garden. This will allow them to feel like they are really contributing to the household, especially if they are aware of the cost of fruit and veges at the shop.

Note: In the last issue, we mentioned that we would be looking at the Government's proposed Gateway Housing Policy. Because the policy has not been finalised, we will leave this for a future issue.