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**cube** · 24-04-2005, 09:22 PM

Just got in from decorating between tenants - nothing like having the 3, 6 & 7 year olds on the job with a wall paper scraper!

Funny how they all wanted to use the scrapers, but I was the one who had to clear up the mess afterwards!

We are using the 'Three Money Boxes' approach, along with the family bank, which pays an exortionate rate of interest (10% every 10 weeks

) to encourage good saving habits.

Noel Whittaker's "Making Money Made Simple" is on their present list for their 16th Birthdays!

Other than that, there is no real plan - lead by example, I suppose.

We had some friends around for dinner, and after a comment along the lines of "You'll always acheive your goals if you don't have any", their 12 year old asks "Why wouldn't you have any goals?"! - she's tri-lingual, an NZ under 14 Basketball rep, future Hip Hop dance star, and definately knows where she's heading.....and her older sister is even more focussed.

We are amatuers at goal setting compared the these guys!

cube

**SimpleSimon** · 24-04-2005, 10:18 PM

Originally posted by cube

Other than that, there is no real plan - lead by example, I suppose.

The only example I really try lead by with my kids (now 15 and 18 year old girls) is openess and honesty - but sometimes it seems that such things are almost the antithesis to business success.

**Ted** · 24-04-2005, 10:20 PM

Hola Marcus,

What a fantastic post this is. I personally have been thinking long and hard about this topic. MY father inlaw is a HoD of one of the local high schools and we used to debate quite hard about how schools/high schools lack teachings in basic budgeting and leaving Mum and Dad.

With these things in mind I have been racking my brain on how to teach my little one about the big bad/good world. Ill list a few things that we have been teaching her and they are as follows:

1. Saving

I tried to understand a 7 year olds wants and needs, At first it was hard and then a cloud opened up .

They need nothing and want everything

lol

This was to be my first lesson.
So I thought a simple savings plan was in order so that she could see what she was saving and what she was spending. I came up with an idea to have big glass jars, one was labeled Savings and the other was labeled spending. This was so she could see everything.

We gave her her pocket money once a week to place half in her savings and the other half in her spending. We told her that she could do what ever she wanted with her spending but would not be allowed to touch her savings unless we all agreed. ie Her Mother and myself.

After 2 weeks she had $5 in both her savings and her spending jars. To make the jars look full we gave her 50 cent coins. Now to test out our little experiment we went to the shop ( 2 dollar shop actually

) As we walked around the shop she spotted some stickers that she wanted to put on her art stuff she does. I asked her how much they cost, she of course said $2 dollars daddy

lol ( silly me ) I then asked her if she remembered how much she in her spending jar................she happily said $5.00 , I then asked her if she was sure she wanted the stickers and she said yes. SO I brought her the stickers and thought ok.............BUT wait theres moreeeeeee she saw some glasses she wanted. I asked her how much they were and she of course said $2.00, I asked her how much she had in her spending jar and she said $5.00...............................WOOHOO I had her!

I said no darling you dont have $5.00 anymore, you brought the stickers and they cost $2.00. I then asked her how much she had. $3.00 dollars was her answer..................but what I loved next was the very next thing she said...............

"oh"

She got it right then and there! The very next thing she said was I dont want the glasses Daddy! I said WOOHOO and brought them for her. This was my reward for the teachings.

I did this just after her 6th birthday, we had been saving for her since her birth, she is the first grandchild of both our parents. In under a year she had saved for her very own T.V from when we started, we did not use the money before hand.( this was a hot topic as my ex did not want her to have her own T.V, we discussed at length and decided that if she could save the money then she could get it, ill discuss why shortly)

When she had enough money I took her to Hamilton to Noel Leemings. We went in and I said to her way you go.................she looked at me funny. I said baby, daddy doesnt need a TV, you want it , you go ask someone for it. ( I sometimes have the throw em in the deep end and see if they can swim mentality)( but look out if a shark comes near her id eat him first)

2. Negotiation LOL!!!!!!!!

It took about 15 minutes before someone came over to us once she found what she wanted ( she had $155.00 to spend, her grand parents gave her $50 dollars for her birthday. Birthday presents have the same split, 50%savings 50% spending, my mother and I had a disagreement about that however!)

Anyway the young man looked at me and said" Can I help you sir", LOL no thanks , she needs help, pointing at my young one.

This was a terrifiying act for her, I was close but she was very unsure of what to say. In the end she said she wanted a TV and pointed. The young man said "nice TV" and started walking away, I interrupted and asked the differances between the one she wanted and the one next to it. He said point blank the one she wanted was a better quality and that it was more reliable...............I thought sweet and she looked happy too so off he went.

Anyway I next thought of an aerial, I wasnt sure if it came with one or not. So off we went to where the aerials were. I cant remember the cost but I do remember saying to her that if it didnt come with one she could get a loan off me for it LOL! She didnt understand but knew she would be watching her TV in her room tonight. The young man then walked over to us with her new TV and I asked if we needed an Aerial, he said "no it comes with one" ( WOOHOO) & opened the box to make sure, it was there.

Anyway I needed a blender so I got that, the young man took the TV to the counter. On the way to the counter I told my baby to ask for a discount. She had no idea what I was talking about but I told her again to ask for a discount. I paid for my blender and looked at her, I motioned her to ask him what I had just said. The young man was taken back but said no problem, he gave her $20.00 off. So the break down is as follows:

TO spend $155.00
cost before discount $149.95
Less $20.00 $129.95
In to spending jar $25.05

Now the problem now was trying to tell her what a discount was. I went to the bank and got $150.00 to try and show her what she had before she got the TV, what the man did to give her a discount ie $20.00 . And what she now had left. This is where we now need to work on her and she still is not sure why he gave her back $20.00................All I can say is its a start!

3. Goals

This has been a long thread so ill keep this one short. THe reason I had to put my mother in her place was that if my baby got all of her money she would have spent it on her TV...........Whats the point in the teachings if I let her do that. I cant stop Mum from buying her stuff but when it comes to her education thats where the buck stops for me.

Jordyn set her goal of saving for a TV, her savings were still going up and the reward for saving hard in my eyes was the TV. Her next goal was an X-Box to go with the TV BUT her Mum wanted to go to the Goldcoast and her spending was diverted to that so she could go too. Good teachings I think.

4. Savings

This was the most fun. When her jar gets full we tip the contents on the floor and count it up ( she does actually) her counting of money is becoming very good and what used to be talk " Daddy I have a $20 dollars $2 dollars 40 cents' is now I have $22 dollars and 40 cents Dad"

And what is even better is when we take those coins put them in a BIG jar we have on our fridge and giver her notes to take to the bank! Thats Fun! Fun for her, Fun for me.

5. Next thing I want to do!

I want her to start her own business. She loves to cook, her mother is a good cook. My idea is for her to make fudge and sell it door to door or at a market. I want to bank roll her, her start up costs get her to do all the work ( with us helping of course) and see how she does walking around the neighborhood ( with me in tow as well)

I want to then show her what we spent to make the fudge. Take that away as our start up cost and then show her what her profit is! Then I want to break this down into her time that she has put into it.

For me this has been fun, I hope fun for her as well but like all 7 nearly 8year olds running around and having fun with friends is what she ALWAYS thinks about. I can only hope that the things we do together stay wth her when shes older.

Oh I forgot to say how she gets her pocket money. On our fridge she has a chore list. She has to complete all her chores and home work before she sits down after school. She has chores after dinner too ( I hate dishes, lucky for her we have a dishwasher

)

Sometimes I think we give her too much pocket money but am happy with what she has done so far.

Whew all the best and great subject Marcus

Ted

**cube** · 25-04-2005, 12:48 AM

Ted,

Great stuff - does the Spending jar stretch to 'tithing' - donations to charity/church, buying Girl Guide biscuits, gold coins for School Gold Coin days etc.?

Most Wealth Creation books stress the importance of tithing, and its a difficult habit to get in to later in live, but if you start out with the attitude 'I'm so luck to have this, I'll give some of it away', then it should remain easy for the rest of your life.

"What goes around comes around" - I've witnessed this enough times to know that there is nothing truer!

The third of our Three Money Boxes is the 'Giving' one - we save up the charity envelopes that arrive, and when the Giving Boxes are full, we talk to the kids about the various charities and what they do ( in appropriate terms, of course ) and let them make a choice of giving now or waiting for later when a 'cause' that captures their attention pops up.

cube

**Ted** · 25-04-2005, 12:13 PM

Awesome question,

My girlfriend soon to be wife and I have added this to our property/business rules. I also beleive that our little one should also do the same. To me how ever the teaching is what this whole exercise is all about and getting the message to her so that she understands. I need to think on something she can relate to to show her this.

Thinking of this however has brought my memory to last years daffodil day. A lady was outside New World in Tok selling daffodils, Jordyn asked me if she could give some money, I said sure and gave her my wallet ( silly me) she opened my wallet where the zipper was and took out all my coins. When I looked at them there was about $20 in gold ( lol) anyway not wanting to make a scene she dropped it all in the bucket and got her daffodil, the lady gave me a card this is what it said as I still have it today!

"...Man gives freely, yet gains even more"
Porverbs 11:24

and under that

Whatever I give away is on its way back to me.

She had a smile I wont forget but in my head I was saying struth that was an expensive flower. In the car I opened the card, read it and placed in a pocket on my sun visor, I never really gave it a thought.

HOWEVER! Tokoroa has a business round table that has a late night shopping thing on Xmas eve i think every year. If you shop in town you can place your name in a draw for a prize of either $5000.00 or 1 of 10 draws of $500.00, this year I can remember placing my name in the draw at my girlfriends pharmacy for buying something. I wasnt at the draw this year as I had nightshift at work. At about 8 or 9 pm I got a ring from a mate who was there and said I had won a $500.00 draw, I didnt beleive it so I rang my Mrs, she laughed and said yep I had won.

Now to the freaky thing and I truely beleive this. I had opened my visor a week before the draw and the card fell into my lap, I opened it read it and smiled and placed it back in my visor never thinking anything about it. I truely think that tithing be you christian or not is the only way to go

Oh one last story and this is also true

my girlfriend and I had dinner at my mothers two weeks ago, an very old family friend was there also. We started having dinner and talking about what ever. One topic was how Mitches mother had won 1.7 million in lotto some years back and how was her trust working ( always trying to learn something ) anyway one of Mitchs brothers had been in jail when she won and hsi mother had dropped him from her trust and wills etc. Now Mitches brother was quite smart and when he came out he started working and now is making a fortune with e-Commerce herbal pills etc. The sad thing is hes a SAD rich man who thinks only of money. At this my girl and I looked at each other and said together he needs to tith. We then told my parents that we are going to tith, give 10% of everything we make to someone we think is deserving....................my father held out his hand..............we smiled and continued our dinner.

Cheers

Ted

Names have been changed to protect those I love

**Ted** · 25-04-2005, 12:23 PM

Just thought of a nice place to sell her fudge on a sunny Sunday morning.

Tirau!

I think it costs $40.00 for a permit so will suss that out tomorrow at the council...........................hmmmmmmmmm still wondering if this is a good idea however lol........she might have to push her old man in the deep end and see if he swims.

Ted

**Neo** · 25-04-2005, 02:41 PM

Fantastic post Marc

Great feedback from everyone.
I might print this out once everyone has added their bit and keep it for later.

I would love to see financial education brought in at school level, too many young ones are too carefree with money and often parents succumb to their children's requests and freely hand over money. There is an old saying, 'Don't give a person food, teach them how to fish'. Another words don't give Tommy a new house show him how to earn money (sell lemons, paper round etc) teach him to save and show him how to make his money work for him to enable himself to buy a house, then he will appreciate it more.

My brother and I earnt pocket money from an early age for odd jobs, cleaning the windows, cleaning the car etc, we were told to save half and we could spend the other half. At the time ANZ gave stickers for every $10 invested (into children’s accounts) and a wildlife animal poster for every $100 saved. This was a great incentive for my brother and me.

Later when my folks brought a burger bar my brother and I earnt money for preparing salads, cutting buns etc. We had learnt the value of money at this stage and were eager to save any money earned (apart from $2.00 worth of lollies each week). My brother and I were quite destructive towards each other and often fought over basic disagreements. My parents found this increasingly frustrating and started charging us every time we fought at $5.00 a fight each!!! Huge money! We learnt fast to control our tempers. We were not so happy with mum and dad for imposing this terrible charge upon us. I am not sure I would do the same to my kids as there can be quite allot of resentment.

My parents were frugal - I have learnt that it is good to save, but it is also good to live. To go without takeaways for a month and then to go horse riding one Sunday afternoon is a fair exchange. So many people take their money to the grave, my hubby tells my I am too tight at times - so we compromise (at this point I am pregnant and will happily go with anything though!)

Later when our children are older I want to encourage the 3 tins, savings, spending and donations. I think each one is independently important.

*Saving even at .20 or 1.00 this teaches the basic principles of saving to invest, so many young people are in debt from a young age with no desire (or knowledge) to improve their financial position.
*Spending teaches kids to prioritise, what do I really want or need. It also makes them realise Mum and Dad do not have an endless supply of money.
*Donation this is so important, this builds character, develops empathy and understanding (and much more). To give with out the expectation of return is what I hope to teach my children. I do believe that what you give comes back to you in other ways. I also feel that giving to others is like topping a car up with petrol, it needs to be done regularly and it keeps us humming along nicely. I am strong in my moral beliefs but then life has been good.

Boy I do ramble - I will save some space for someone else to write down their advice and wisdom.

Neo

Thank you to everyone who has added something to this post.
You have given someone else a smile and something to think about.

**Ted** · 25-04-2005, 04:10 PM

Awesome Neo,

Im going to add a third jar to my girls room and it will be labeled donations. Thanks Cube and Neo for this idea.

Awesome thread I hope the education minister reads PT...........he needs to if he doesnt

All the best

**Gerrard** · 25-04-2005, 06:34 PM

Have to agree - a great thread. My plans are fairly simple at the moment, and in line with the idea of saving / spending buckets, but I really like the donating bucket too.

Most people (let alone kids) don't understand the power of compound interest so I'm trying to figure some way to demonstrate that one to a kid. Any ideas would be good.

My plan is to encourage savings from an early age, get the compound interest, so by school leaving age there is hopefully something reasonable there to invest.

Hopefully throughout the school years she will have been learning about investments and have some enthuseasm for the idea. Maybe do mock sharemarket exercises (or even real ones with small stakes) during school life.

Then at leaving time my plan is to help buy her first IP. She can put in whatever deposit she has, and cross secure against our house. We set her criteria, analyse all the deals together, go looking at properties, make a few offers, learn about negotiating, buy something, find tenants, manage the property etc.

I'm hoping at this stage she'll head overseas for a few years real life experience which I will willingly pay for. I'd much rather see her earned $$ go into an investment and I'll stump up for a plane ticket.

By the time she returns in year 20XX the market will have changed, hopefully she will have seen the benefit of an investment, and finally really "get it".

So that's my plan. Who knows whether she will care enough to be part of it, but I'm planning to give it a go. Might have to adjust the plan somewhere along the line there, I'm sure!

Gerrard

**Marcus** · 25-04-2005, 06:37 PM

Hey folks. Great ideas!

I am picking up some hot tips to pass on to me little one. I'm liking the glass jars, the reason for having 3 jars, the automatic saving of half of all incoming funds, the getting fined for fighting

(I would have always been broke..... oh that’s right I was

), helping guide them through purchases and asking for a discount even though they don't understand what or why they are asking for this (this could be a good thing initially). My wife has a big problem asking for discounts yet she will pick through all the latest flyers with a fine tooth comb looking for sale items.

I actually enjoy negotiating discounts and monitoring the reactions of people during the process. Its quite fascinating. I slowly planted out my garden buying most of my plants through our local garden/craft markets. Boy was that fun. I found myself still returning to buy plants months after my garden was full. Plants that are $15 - $20 in Palmers can be found selling for $5 - $10 (some Grasses are less!) and when I buy 2 or more, I like to negotiate discounts. It's fair to say I have a go at most things I buy (apart from the obvious things like petrol, groceries etc).

Perhaps you could do a similar venture with your daughter Ted and have her help plant the shrubs/plants. I like the way you have let her get her feet wet with these things.

On the school education front. Perhaps we could all come up with a course to take to schools or government that would help children better understand financial fundamentals.

Keep the ideas and experiences coming. I am loving it.

Cheers.

**orion** · 25-04-2005, 07:59 PM

Hi Marcus,

I haven't read all the replies, so someone may have already mentioned this one.
With your child's allowance/pocket money or however you do it, get them to save 10%, tithe 10% and invest 10%, or build up a suitable amount to invest etc. Then with the investing dollars, sell him/her part of your house such as the garage or shower for say $50, or whatever figures you decide on. This would be written up in make believe ownership form etc. Once your daughter has the garage for example, every time you park your car in there, you have to pay her say $1 to rent it for the evening. Or if it was the shower, 50c every time you have a shower. When enough income is made from this, she could buy something else from you such as your car, dishwasher, oven, microwave, washing machine, the lounge etc. This teaches the benefits of saving for something tangible - an asset, then creating an income from it long term.

Regards
Graeme Fowler

CJ · 26-04-2005, 06:51 AM

I dont have kids but thought I would comment anyway, though my suggestion may not be welcome since this is a property forum.

Why not buy your kids some shares. Not risky ones but one that follows the index. The stock exchagne has a couple of goods ones such as TENZ - see article or www.nzx.com and search for smartshare - or FONZ. WiNZ by AMP is a worldwide index.

I think you can start with a low investment of say $1,000 and I even think you can invest as low as $50 or $100 a month brokerage free. Similar to a managed fund by in the sharemarket so they can look up the price ni the hearld and read the business section to see what Telecom or Contact etc are doing.

You could then monitor quarterly and the kid would get an appreciation of how markets work. it could then be their college fund so that they dont have to get a student loan.

Now before you think I am Mary Holme, who would love my advice, i am not recommend you devote all your money to it or that you sell your houses to invest in it.

Just use it as a way to show that markets go up and down. It will also get them in an investing mind rather thay just a jar on the counter.

It also will teach them about diversification, within shares and also as part of a portfolio along with Property.

Orion - I hope you are teaching your kids to look after the elderly aswell because by the time your kids grow up, they are going to own your house, and probably anything else you sell them for cheap and I wouldn't want you to have to sell the car to be able to afford the rent after they increase the rent - just like daddy does.

**Holly** · 26-04-2005, 10:16 AM

Hi Everyone.
We have been teaching our children to save at least 10% of all their income (pocketmoney, gifts, etc). When they reach a preagreed amount we will add to it. eg: they save $20 we add $5. This gives them the added incentive needed to keep saving. We try to get the kids to always ask for a discount, this is a great habit to get them into with awesome potential rewards.

We talk to them on a regular basis about money concepts and we play cashflow for kids as often as possible. They love it for what they learn and for the time spent together. We brought our son (13) Rich Dad Poor Dad for Teens for Christmas and he and his sister (10) have read alot of our basic money books. With the two younger children(5/3) they just enjoy saving their money into their money tins and spending it on lollies or at the $2 shop.
I think it's becoming more and more important for parents to give their children the financial knowledge needed to survive in the real world. As mentioned it's not being taught in school. I have asked a nuumber of times what is being taught to our children about finances and always get the same answer. Not much!!!! This is a great post and one dear to my heart, after all we all want the best for our children.

**cube** · 26-04-2005, 11:27 AM

Originally posted by Marcus

I'm liking the glass jars

Glass jars make a lovely noise when the shake all that loose change around in the, but it can be a bit messy if they get vigourous.

The banks still give away money boxes, but usually one per account.

We've got a bank money box (saving), a 'novelty' box (giving) and a purse/wallet (spending).

cube

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