Mothers Teaching Money

Financial capability, from a mother’s perspective

As a mum, it is my job to teach my son the life skills he needs to be a happy, competent adult including, but not limited to, his IQ, EQ, SQ and FQ, or his financial quotient which is essentially his financial capability.

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According to the Commission for Financial Capability (CFFC), financial capability ‘conveys the fact that sound management of one’s personal finances is not just about  that you know, but about attitudes, confidence, motivation and behaviour.’

Most of us learn our money management skills from our parents or other significant adults and it will be no different for our children. It is the one skill used by everybody regardless of their career path.

I want to teach my son the following five important lessons:

1. How to earn money and make it grow.

2. Money management skills including budgeting.

3. A working knowledge of financial concepts such as time value of money and compound interest.

4. The difference between good and bad debt.

5. Giving and how it helps us and those we are giving to. The reality is that our children will do what they see us doing. If I preach saving but my son only sees me spending, chances are he will have a similar spending/ saving pattern. As a child, I did not receive a formal financial education, so as an adult, I often felt overwhelmed, inadequate and powerless around money. I wished someone else could do it for me.

I made a conscious decision to change that.

I forced myself to get financially literate, change my behaviour and start those all-important casual financial conversations at home. My ongoing quest encompasses not only financial theory, but also explores the emotional reasons behind my long-held money habits, and challenges my beliefs and scarcity mindset.

This has enabled me to pass financial knowledge onto my son. The following ten financial basics are practiced and discussed in our family as a normal part of growing
up:

1. Save first, give second and spend last.

2. Stick to a budget that suits your personality.

3. Create an emergency fund that takes care of life’s curveballs, creating control and peace of mind.

4. Plan early for retirement as time is your secret weapon.

5. Automate your savings and expenses.

6. Understand cashflow and the difference between assets and liabilities.

7. Know the difference between earned and passive income.

8. Utilise KiwiSaver.

9. Understand fees and the drag they can have on investment performance.

10. Be smart about why and when insurance is necessary.

According to my son, a financial education was boring and uncool. My teaching, therefore, had to be relevant, fun, in bitesize attention-grabbing chunks and social
media had to play a role. Our home-made videos for children and YouTube became our classroom. Each video introduces a financial concept or skill. Here are some of
the lessons:

· Learning to play soccer is no different to learning about money. They are “Both
Skills and Take Time, Hard Work and Patience.” There is no quick-fix.

· A visit from Einstein introduces the concept of “Compound Interest” as the most powerful force in the world.

· A drive in the car initiates discussions around “Assets and Liabilities.”

· Dollar Dan borrows money to pay for a luxury item, an extra-large ice-cream. The ice- cream falls on the floor and gets eaten by his dog. He learns how easy it is to get into “Debt.”

· Dollar Dan is shocked when he calculates how much mum spends on coffee in a year. He learns how quickly the “Small Expenses Add Up.”

Financial field trips are another great way to initiate those all-important money conversations and can be done as a school outing or with your own children. Here are a couple of practical ideas:

· When you are at a fast-food outlet, initiate discussions through questions such as “Who owns the building? Who owns the land under the building? What is a franchise? What is the difference between earned and passive income?”

· Go on a bus ride and look at domestic and commercial properties. Talk about mortgages, interest rates and debt. Ask questions like, “Do you think the person
who lives in this big house is rich? Do they have lots of money or lots of debt? What
is debt?”

In the ideal world, both home and school would be raising financially competent,
debt-free adults. However, in the real world it seems we are not quite there.

It is never too late to learn a new skill or to teach our children about money. If our
children see us being financially capable every day, chances are they will learn excellent money habits from us. My aim is to act as a trigger for mums to think about and make  changes to their own money habits, which in turn, will benefit not only themselves, but their children as well.

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Laurel Makowem


Laurel Makowem is a Certified Financial Education Instructor and founder of Mothers Teaching Money, a business and movement helping parents raise
financially confident, responsible and independent adults, regardless of their own financial knowledge or situation. Her mission is to demystify financial literacy through the Millionaire Mindset Money System, a comprehensive holistic financial education system. She provides fun online courses, workshops and products for children from 4-18 years.
Laurel can be reached at mothersteachingmoney@gmail.com.