Where did you get your money know-how from? Photo / NZME
Most of us credit at least some of our knowledge to our parents, but when it comes to being good with money it seems there are key traits learned from them that help determine if we will be good at managing money in the future.
Research by Te Ara AhungaOra Retirement Commission for Money Week has revealed where we get our money beliefs from and the most common activities for those who feel they are in control of their finances.
Of the roughly 1000 people surveyed in June, 71 per cent said life experience shaped their beliefs about money while 63 per cent put it down to watching their parents.
And they learned whether their parents were good with money (cited by 45 per cent) or struggled to manage it (30 per cent).
Tom Hartmann, personal finance lead at Sorted, the Government's money education site, which is part of the Retirement Commission, said it was good news that people could learn what to do with their money from seeing their parents manage it poorly as well as being good with money.
"The worry we have is that people could be disadvantaged if their parents weren't good with money or they saw their parents struggle and that doesn't seem to be the case.
"If we saw good things that our parents did we take them on but if we saw them struggle we learn what not to do."
Conversely, just 10 per cent got their financial education from school.
Hartmann said the school numbers were low but for those aged under 25 it was higher - one in five learned from school - and he said that was because the topic was new in schools.
Sorted's school education programme was now in 78 per cent of all high schools and 83 per cent of all kura after being rolled out a few years ago.
"It has reached those schools but now it just needs to bed in. Things are changing there."
Good habits
The research also found that those who gained their financial values by watching their parents manage money well were more likely to undertake a range of activities to stay on top of their finances.
That included cutting back on spending, saving money regularly and insuring their belongings.
Saving was the most common attribute, with 64 per cent saying they did it regularly even if it was only a small amount.
Hartmann said all of personal finance really came down to saving and being able to save was the biggest secret to success when it came to being in control of your finances.
"We can talk other things like emergency funds and investing and KiwiSaver but you can only do those things if you are able to save. And even small amounts because they can add up over time and compound - those little habits make outsized differences because we typically discount the effect of time."
Being able to cut back on spending and go without was also a key part of having financial control.
"There is a lot we know about, especially early on, around delayed gratification ... and how that sets you up for success.
"If you watched your parents manage money well you probably saw them being ready to go without whenever they needed to and therefore you are able to emulate that behaviour and be ready to put things off when needed."
He said that didn't mean someone needed to do it all the time but it meant a person had the ability to do it when sacrifices were necessary and the best course of action.
On top of that those people were also more likely to contribute to KiwiSaver, have an emergency fund, be paying off debt and talk to their partner and family about money.
Hartmann said even having insurance went back to having a savings habit.
"Typically if you are spending everything coming in, or more than what is coming in, if you are depending on debt, then you really don't have anything left over in order to pay for insurance or to help transfer that risk."
He said some might rely on debt - crisis borrowing - to handle those risks - such as a car being damaged in an accident.
"In order to take advantage of an insurance product you have to be a saver, you cannot be using up all of your disposable income or more than that and relying on debt. There is simply nothing left over in order to buy those insurance products and take advantage of what they have to offer."
But even if people didn't learn how to manage their money well from their parents they could still learn through life experience.
"The good news is that a bit of reflection goes a long way. If you are thinking about the home you grew up in that would be typically more open or closed about money - either it was talked about or not and the atmosphere was either more stress or more calm. And of course, what we want for everyone is for them to grow up in a secure household.
"If it wasn't, [then] we can make changes to be more open about money."
Sorted had resources available to help people start talking about it.
He said there was a lot of shame that came along with money, either because people were carrying debt or because things had not gone well in the past.
"Who can say that everything went perfectly? We try stuff as part of living and some things don't go well, but that can make us reluctant to talk about it."
He said people could learn from each other and there were tools and guides available online.
Money Week, which runs from August 8 to 14, was a good chance for people to take a look at their finances.
• Got a burning money question? Tune in to www.nzherald.co.nz on Friday at noon to put it to Tom Hartmann in a live Q&A.