JUNO INVESTING ©

Book Review – Creating Financially Capable Kids

JUNO INVESTING ©
Book Review – Creating Financially Capable Kids

 

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By Jacqueline Taylor

Hannah McQueen’s new book Pocket Money to Property – How to Create Financially Independent Kids is getting many parents’ attention. How much should parents be involved in their children’s financial learning and is it necessary? Jacqueline Taylor investigates.

I had the pleasure of attending one of Hannah McQueen’s recent seminars touring the country over June. Hannah McQueen is the founder and director of enableMe, a financial training service offered to Kiwis around the New Zealand.

McQueen is a financial guru who could speak on numerous topics affecting the management of our personal finances. However, this seminar focused on creating financially independent children, a topic McQueen researched for her new book Pocket Money to Property – How to Create Financially Independent Kids.

McQueen is concerned that New Zealand parents are not preparing their children enough for financial success. And this is something that is crucial in the modern world. There are financial challenges facing our children that will affect them for years to come.

Young people are entering their adult lives in debt. Tertiary students can receive loans of NZ$50,000 to NZ$60,000, that can have an impact on the next 20 years of their lives. With these massive loans, young people are needing to make financial decisions that adults make 20 years on.

It’s been scientifically proven that at this young age, the brain’s frontal lobes are not fully

developed to make adult decisions. Unsurprisingly, New Zealand society has the highest number of people under 30 being bankrupted.

Most young people entering the workforce understand you have to spend less than you earn, but with possible loans to pay off and expensive living costs, following this rule isn’t always going to work to get young people in a good financial position, and “certainly not on the property ladder”, says McQueen.

We’re facing a generation of children who are struggling to get ahead and don’t know what steps to take to get there.

McQueen spent two years interviewing more than 200 children, parents, teachers, career advisers, family therapists and psychologists for her new book.

The underlying message from her research is that parents need to play a major part in improving their kids’ financial capability from a young age, so the next generation of adults can be in control of their money and have retirement sorted.

“We want to give our kids the inside lane [to life] – and those that are in this position are financially capable,” says McQueen.

But the question is, how do we create financially independent kids?

The major financial objectives we want our children to achieve are earning power, money skills and saving habits. McQueen has devised several strategies, outlined in her book, for parents to instil at age groups 5 to 9, 10 to 13, 14 to 16 and 16 to 18, to support their children’s financial journey.

For 5- to 9-year-olds, parents need to engage in casual conversations about money. It’s all very well to present our children with ‘spend’, ‘save’, and ‘give’ jars, but how can a child spend, save or give without earning?

At this age, it’s important for children to understand that if you work, you get paid. Pocket money at this stage is a great incentive to get children to participate in jobs around the house above their normal daily duties.

For 10-to 13-year-olds, real world application is the focus. This is a good time to engage our children in conversations about the cost of running a household, helping them understand bank accounts, and managing an allowance.

Building confidence and financial capability carries on through ages 14 to 16; and for 16- to 18-year-olds, parents need to support their children in their transition to adulthood. This is a time to teach our children how to create wealth, and offer some options to do this.

Setting goals and understanding how leverage and investment work are essential skills.

Our financial landscape is moving fast, and our kids are getting left behind. Hannah McQueen’s new book will help parents equip their children for the real world; the financial world. After all, money underpins it all.

For more information about seminars and Hannah McQueen’s best-selling books, go to www.hannahmcqueen.com.