| This is a really important subject but most parents tend | | | | passive income is the way to go. Passive income is |
| to leave it till after the ‘birds and bees’ talk and | | | | income you do not have to keep working for: interest |
| in some cases not discussed at all. | | | | on your savings account; rental on an investment |
| Growing up in New Zealand (which, let’s face it is | | | | property; dividends on your share portfolio – these |
| remarkably similar to growing up in Australia), and | | | | are all forms of passive income. |
| looking back on my childhood and teenage years, | | | | Personally, I love to start by getting the kids to think |
| I’ve come to realise that my parents had life pretty | | | | about and write down their goals or dreams (as you |
| good. In New Zealand, unlike many other countries of | | | | have read or heard before people who have a list of |
| the world, life is fairly good and, to a great extent, | | | | goals are likely to achieve more in life than the ones |
| easy. New Zealand doesn’t really have the very | | | | who do not!). By writing down their goals or dreams |
| poor nor the really well off – the majority are middle | | | | they’ll start to understand why they do things (like |
| income people or families. | | | | saving). Having a goal or dream gives purpose to |
| Back then (and I’m only talking about 20-30 years | | | | what they do to achieve the goal. |
| ago) there was no real need to learn how to invest as | | | | Next, work out the steps to achieve the goal by |
| the world didn’t truly value the way money would | | | | working backwards. For example; if the goal is to win |
| help in all sorts of ways. The real choice was about | | | | a local golf tournament, the second last step is to |
| lifestyle – but not in the way we now look at and | | | | practice putting. The step before this is to practice |
| value lifestyle. | | | | chipping. The step before that will be to practice driving, |
| Today the world has changed. Life has become | | | | and so on. So, as you can see, the plan will come |
| faster, mainly due to our high use of technology. | | | | together pretty quickly. |
| Think about this: my parents have seen air travel go | | | | Another example could be purchasing a bicycle in |
| from being a complete luxury to almost everyone | | | | November at a cost of $350. Sit down and work out |
| being able to afford to fly (and in some cases it’s | | | | with them how much they’ll need to save each |
| cheaper to fly than take the bus or drive!). And my | | | | month and how much of their pocket money, or |
| grandparents: they grew up with the horse and cart! | | | | income from their paper round or whatever it is they |
| Heck, the first computer I used was an old Apple | | | | do to earn some money, they’ll have left over to |
| which a selected few of us at school were allowed to | | | | spend on other things. This is, effectively, a budget. |
| study with. I remember it had a green screen and | | | | I strongly recommend and urge you to teach your |
| we had to learn Basic language to program in! These | | | | children how to budget. Starting with a specific and |
| days, all screens are in colour and no one learns | | | | focussed goal that they want should help get them |
| ‘Basic’. | | | | motivated to learn. And, don’t forget to include the |
| At school I took a number of subjects you’d think | | | | passive income from interest they will earn on their |
| would teach me life skills, such as: | | | | savings. |
| - Accounting: but I wasn’t shown how to budget | | | | Teach your children about compounding interest and |
| - English: taught me to write for pleasure, not a detailed | | | | how they can benefit from putting in the work, saving |
| report on the progress of the company I work for | | | | and then having the money work for them, creating |
| - Math: sure, it taught me how to count, and calculate | | | | additional income, passive income. This naturally leads |
| how to fly to the moon ... but not to understand why | | | | on to investments - looking for the opportunity to earn |
| the graph changes are important to a business | | | | passive income. Remember kids learn from their |
| Fortunately, technology has moved on, but sadly the | | | | parents, so you’ll have to get a good grasp of this |
| education our children receive at school has not caught | | | | subject yourself in order to teach them. |
| up nor improved from when I was a youngster. | | | | My goal with children is to open their minds to the fact |
| When I left school my parents could not even suggest | | | | that there are many ways to make money. Not to |
| how or why I would buy a house; information was | | | | look for one big pay day, but to have many forms of |
| hard to come by and their recommendation was to | | | | income which together equal a large monthly pay day |
| see a lawyer and he would explain this to me! | | | | – a pay day that they do not have to work for |
| Information is now freely available on the web. But, | | | | over and over and over. To live the life they really |
| who can you trust? There are so many conflicting | | | | deserve because money is not an issue. And we all |
| pieces of advice it’s next to impossible to work out | | | | know how many problems can be caused by not |
| who is right, who is wrong and who you should trust. | | | | having any or very little money! |
| I believe a child will get majority of their real information | | | | I always tell people my and their education will, or at |
| from their parents, right or wrong. I urge you not to rely | | | | least should, never end. I have studied and have |
| on others; family, friends, teachers, lawyers, | | | | attended numerous seminars to help my study so that |
| accountants or financial planners; to give your children | | | | I could become and stay financially well off. |
| information and advice about what to do with their | | | | You need to understand that you have to keep up |
| lives. As an example, studies have shown that the | | | | your education, to keep up with the changing |
| majority of parents who have gone to University will | | | | technology and financial times. Staying educated and |
| have children who will do the same. Likewise, a lot of | | | | up to date will help you to teach your children the |
| parents who were self employed will have children | | | | important things they need to know about their financial |
| who will become self employed. | | | | future ... they certainly won’t be learning it at school! |
| So, as a parent, where do you start? My advice: | | | | |