New Zealanders should talk to their children about money

8th September 2012

The Financial Services Council encourages New Zealanders to talk to their children about money

New Zealand’s first Money Week is September 2nd – 8th 2012.

The Financial Services Council is in full support of Money Week and its dedication to financial literacy education in New Zealand.

This year FSC wants New Zealanders to talk to their children about money.

FSC chief executive Peter Neilson said, “We all think it is important that everyone learns to read, write and count, but practical financial literacy is rarely taught at home or school”.

As leaders of an organisation and companies which manage more than $80 billion in savings and provide financial services to more than 1,800,000 New Zealand investors and policyholders, the FSC are sharing best tips and advice FSC Members recall getting as or giving to a youngster to improve their financial literacy.

As a father of two, Mr Neilson is often sharing his knowledge and experience with his children.

“The advice I have given my kids is that the quickest way to your first home is for you and your partner to join KiwiSaver as soon as you start working,” Mr Neilson said.

The following is advice for young people from the leaders FSC Member companies:

1) Wayne Besant, CEO of AIA Insurance
AIA is a major world wide insurance company

Good budgeting skills are the foundation for future financial security. Learn how to set a budget, stick to it - and understand the benefits and upside when you do – and the consequences if you don’t. You’re never too young, or too old to learn but the earlier you start, the better.

2) Martin Lewington of Mercer Australia, Mercer
Mercer is a KiwiSaver default provider and superannuation policy adviser

The earlier you start, the easier it is! This philosophy can apply to all types of things, but in particular, I’m talking about savings – it’s crucial to teach our kids the importance of financial literacy - a key life skill.

The concept of retirement may seem like a long way off to them now, but at Mercer, we’re in the business of retirement – and as such we help people maximise their savings throughout their whole life to ensure they’ll have enough when they are no longer working.

In New Zealand, statistics show we’re living longer and will one day have a large number of retirees to support, with fewer taxpayers to fund it. This means today's children will need to prepare for a much different environment.

While it is challenging to get a young person to think hard about what they’ll be doing 50 years from now, KiwiSaver provides a great way to start the process. Making contributions from young adulthood will make a big difference down the track.

And the best way to teach your kids is by example. Talk to them about KiwiSaver and why you are a member – and if you’re not, it’s time to be!

3) Roland Slee, Managing Director Asia Pacific of Bravura Solutions
Bravura Solutions provide support systems for the wealth management industry

Your best friends in retirement savings are compound interest and 3rd-party contributions.

My tip is to ensure you make the most of your retirement savings. When saving for retirement your best friends are compound interest and 3rd-party contributions. Compound interest ensures your savings become dramatically more valuable over time as you earn interest on your interest. So it's important to ensure your savings are wisely invested and that fees and charges are not unreasonably eroding your position. It's also great to start early and be consistent with your savings.

Secondly, many retirement savings schemes, like KiwiSaver in New Zealand, include provisions for Government and employer contributions. These organisations are actually going to chip in on your behalf, increasing the value of your savings and accelerating your journey to financial independence. So make the most of your savings by maximizing the advantages of compound interest and 3rd party contributions; you'd be a mug not to!

4) Sam Stubbs, Chief Executive of Tower Investments
Tower Investments is a major stock exchange listed NZ based insurer and Investment Company and a KiwiSaver default provider

• Buy fewer, better quality things.

• Buy a house or flat as soon as you can afford it and don’t worry about whether they are ‘cheap’ or ‘expensive’.

5) Campbell Chambers, Chief operating officer of BNZ

The best advice I was given as a young person was to start saving as soon as I started earning. Saving is such an important lesson to learn, and like many things in life – it’s easier to learn when you’re young. It doesn’t matter how big or small your first savings contribution is, even putting a little bit aside when you first start earning an income will help you to get into the habit early. After all, it’s a lot easier to start a good habit early than it is to break a bad one later!

It’s an exciting time when you receive your first pay – it’s the result of hard work and it might even come after years of studying. Naturally it’s tempting to go out and treat yourself in celebration. If you do that first time though and don’t save a portion of your earnings, it’s easy to find an excuse to splurge the next time too and pretty soon you’ll become accustomed to that lifestyle. Starting saving at the beginning of your career will set you up well for the future so when it comes time to start saving for the bigger purchases like a house, it won't be so daunting!

If you can remember the best bit of advice you have received and would like to share it, please email fsc@fsc.org.nz and we’ll post it to the FSC website

ENDS

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