Sandra Paterson: Learning life lessons under the feijoa tree

Four years ago, I spotted a section for sale down on the East Cape. Right across the road from the beach, it was quite large and slightly elevated with a good view.

Sale price? $30,000. A surfer friend of mine bought it and it is now worth more than $120,000.

We have been back to the same bay every summer since; and I kick myself that I didn't buy it, or the adjacent section, when I had the chance. No, I didn't have the money at the time, but I'm sure I could have found a way had I tried.

The reason I did not is because I am far too conservative when it comes to finance.

Some people seem to be naturally good at making money - like my friend who earns about $45,000 a year but who now owns a million dollars' worth of real estate. But the vast majority of average-to-good wage-earners either spend as fast as they earn or are too afraid to take the kind of calculated risks required to make money grow.

Part of that fear comes from the way many of us were brought up. My dad worked hard and earned an average wage; and in typical 1960s and 1970s style, he bought a house and paid it off over the decades but acquired no other real assets.

We lived modestly and were taught to save - but not how to invest or make money grow.

School was no more enlightening. "Study hard, get an education and a good job and you'll be fine," we were told. But while that advice seemed to work for earlier generations, times have changed: having a steady job and even owning a house is no longer enough to make anyone truly financially secure or to prepare for retirement.

What concerns me is that our children are still getting the same advice and are not learning how to manage money.

Most students never learn how to turn earned income into passive or portfolio income, how to use the sharemarket, invest in real estate or use a budget.

They do not study how to run a company or the power of compounding interest or the real difference between an asset and a liability (although the bank will tell them a car or item of furniture is an asset, most financial gurus say a true asset is something which puts money in your pocket).

And so one generation after the next emerges from the education system able to read and write but financially illiterate.

Of course, education and a career are very important. We need teachers, hairdressers and, dare I say it, journalists. But most teachers, hairdressers and journalists will still be ill-prepared for retirement unless they are also investing in some way.

A while ago I decided to do something about it, to try to change the way I thought about money. So I have started to read books about financial freedom by authors such as Robert Kiyosaki and John Burley.

"Today, the most dangerous advice you can give a child is 'go to school, get good grades and look for a safe, secure job'," says Kiyosaki in Rich Dad, Poor Dad. "Because if you want your child to have a financially secure future, they can't play by the old set of rules.

"Employees lose; owners and investors win."

I want my daughter to get a good education and a job she enjoys - but I also want her to have some financial know-how.

Along the way she will need better teachers than me.

However, the other day I did manage to show her how owning a business can be more profitable than working for someone else.

For a long time she has wanted a particular doll - one of those talking, giggling, (eating) varieties with a $100 price tag. There is no way we could ever afford it, but I told her she could sell the feijoas from the enormous tree in our backyard and keep the profits if she did most of the work involved.

So she packed the fruit into bags, made signs and set up a little shop at the end of the driveway. Our tree is an early fruiting variety and, on the first day, there was just about a traffic jam. She made $16 in about 20 minutes, with me, as the company director's mother, running up and down the driveway supplying her with stock.

This past week she has made a profit of $43 - that's after paying "staff wages" to the neighbourhood kids who helped pick and sell. Not bad for a 6-year-old. And she has seen how it is possible to earn more than her pocket money if she thinks outside the square.

There are a handful of great programmes teaching young people about money, such as the Young Enterprise Scheme which shows senior secondary students how to form and run their own company.

One local Tauranga primary school does the same thing with 9-year-olds and 10-year-olds, helping them design, produce and market a product. We need more of these schemes to raise our collective financial intelligence.

Meanwhile, I am pondering the fact that selling feijoas works out at a much better hourly rate than writing columns.

* Sandra Paterson is a Mt Maunganui freelance writer.