Photo: Supplied
Many of our values about money - good, bad and indifferent - are passed down from our parents.
But if we want to put ourselves and families on a sound financial footing, we need some honest and open discussions about money, RNZ money correspondent Susan Edmunds says.
"I think kids do pick up messages from their parents, even if they're not ever made explicit," Edmunds says.
In the latest episode of RNZ podcast Thrift, we look at money, families and how best to navigate what can be a slightly awkward topic.
Follow and listen to Thrift on [podcasts.apple.com/us/podcast/thrift/id1745628538 Apple Podcasts], [open.spotify.com/show/6YXwcCfyP7mMn4nJqEGoF6 Spotify], [iheart.com/podcast/174982006/ iHeart], [music.youtube.com/playlist?list=PLB06qFjAt4VAswuudToRvWQsgSln-Ch4c&si=7r9fGu1ejpUPRDfG YouTube Music] or wherever you get your podcasts.
Edmunds' first tip is to work out what we think financially by sifting through those early beliefs, which ones were good and which ones we should ditch.
"We all grow up with lots of weird habits from our families, and it's hard to change them, but I think acknowledging them is the first thing, just knowing that you might have these thoughts because of how you were raised."
Next, Edmunds recommends examining every financial choice we make.
"Am I making this decision because of some belief that I hold for no good reason, or is there another driving force for it?"
Her second tip is how to maintain, or possibly adapt, your financial approach when the next milestone comes along, and you partner up.
Often, we don't even realise the sorts of attitudes that we hold until they collide with someone else's," Edmunds says.
This is where good communication comes in, she says.
"Some couples I know have a budget where they have this part for us, this part for you, this part for me, and that maybe gives them a bit more flexibility to juggle those different personalities."
The other option, she says, is not sharing money with your partner.
Edmunds reckons managing finances separately can work in some situations.
"I think if you're coming into a relationship later in life, if you've got different obligations and things like that, it can make sense to keep it apart."
Financial infidelity, however, is not okay.
"I think it's totally fine to keep money to yourself, but I do think you shouldn't be actively hiding it unless you've got a really good reason."
Sexually transmitted debt is the other thing that people need to watch for, Edmunds says.
"You can pick up debt from a dodgy relationship, the partner will take out a loan and say, could you be a guarantor, or could you put your name on the loan? And then the relationship breaks up and you're left with a debt."
Tip three is all about children.
"I have kids of my own now, and they have some lofty ideas of what we could spend money on, so it's definitely good to get everyone on the same page," Edmunds says.
Again she advocates for open discussion.
"There's nothing that I'd be too embarrassed telling my kids about in regards to money, just opening it up, this is what it is, it's not good or bad, it just is, and this is how we're managing it."
Setting them up to do a supermarket shop is a good way to start teaching, she says.
"Give the kids your phone with the calculator, and they can add up as you go along what you're spending to make sure you keep within the budget."
Once they've seen how the household budget operates, Edmunds recommends giving them a small sum of money to manage themselves or make them earn it through chores.
She also manages a long-term savings account for her children.
"So that they can see that building over time, and that hopefully is getting the next bit through that a little bit saved often will add up."
Edmunds points out that the younger children are, the better placed they are to take advantage of compounding interest.
"Which can deliver them really significant investment outcomes if they can make the most of it.
"I think so many people don't realise how much they could achieve if they started when they were young."
Once children have the basics and maybe some savings in their bank account, it's time to get them investing, she said.
"You can set them up with something like a Sharesies account that can be quite can be quite a good way to learn about how investments work."
Photo: 123RF
Thrifty tips
- Work out what you've learned about money from your own family and if it's actually working for you.
- Talk about your money personality with your partner, and set some shared goals.
- Separate funds are okay, but be honest about what you have.
- Be open with your children when it comes to money, give them a small amount to manage or invest and encourage them to save.
- The younger they start earning compound interest, the better setup they'll be.
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