Simon Power: The bank of mum and dad doesn't always pay

Simon Power. Photo / File

The first meaningful piece of financial advice I received came from my father when I started working. It was simple but good advice - he told me to put aside a portion of my income each payday before spending money on other things.

Young New Zealanders are more likely to turn to their parents for financial advice through the different stages of their lives, even if they sometimes harbour doubts over the quality.

The recent Westpac Massey Fin-Ed Centre longitudinal study found that parents were their main source of financial knowledge for around half the respondents - edging out life experiences, friends and the internet.

This reinforces the importance of children and young people getting a good start in life when it comes to financial knowledge and habits.

Some young people don't have the luxury of parental guidance. Only 35 per cent said they believed their parents knew what was best for them in terms of their finances.

In some cases this bumpy start may lead to costly decisions that are difficult to reverse and poor financial habits that are hard to shake, even for those on relatively high incomes.

The research shows this has the potential to become a generational cycle and the impact can be high. It can leave us feeling dogged by money-related stress, broke or just scraping by.

Making financial education compulsory in schools would go a long way to giving our children the right start in life, and to that end it's good to see the Commission for Financial Capability preparing to roll out a nationwide Sorted in Schools programme to help young people become financially capable.

But it doesn't rest there. We all have a collective responsibility to upskill so we understand how to look after and grow our money and so we can pass that knowledge on to our kids.

Growing our knowledge, and with it our savings, gives us the freedom to grow in other areas of our lives and the confidence to talk about money so our children form good habits and become prudent spenders and investors.

So start early. Experts say some simple things we can do are:
• Pay pocket money for jobs around the house
• If a child wants a toy, make them save up to buy it
• Involve your child in the weekly shop, including writing the list, comparing the cost of items and making sure the final bill is within your budget.

Another thing that stood out from the Westpac-Massey Longitudinal Study was the gender imbalance. Tested on their financial literacy, men scored an average of 71 per cent, compared with 55 per cent for women.

This reinforces the importance of parents talking to their daughters about money as we know women face more barriers than men in their careers and in saving for retirement, as well as living longer.

Tackling these challenges requires a collective change in mind set. One of the necessary changes is we need to overcome our reluctance to seek out formal financial advisors or educators.

There are many courses around. At Westpac, we run free Managing Your Money workshops for anyone (regardless of whether they are a customer); we have a Budget Calculator to help people manage their week to week outgoings and our CashNav app helps people monitor and manage their spending.

The Commission's Sorted website has some valuable resources and the Citizens Advice Bureau is another excellent starting point.

Financial independence, for our daughters and sons, means a life with more choice and freedom, and less worry about the future ahead. It will allow them to take control and fund the things in their lives that are important to them.

- Simon Power, Westpac general manager – Consumer Bank and Wealth

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