Empower the next generation by helping them understand money

 

Empower the next generation – help them understand money

As parents, grandparents, aunties, and uncles, we all want to see the next generation succeed. You can help set them up for future success by helping them understand how to manage money when they’re young.

As an adult role model, sharing some of your financial knowledge with the younger generation (including the mistakes you made along the way) can help them realise ‘money doesn’t grow on trees’ and that being comfortable financially takes work.

Starting out with simple concepts like budgeting, credit, saving and investing could help them (when the time is right) to build wealth and secure a home loan.

Six money management tips to share with young adults in your life​​
  1. Budgeting – Divide your money between what you ‘need’ (e.g. rent, food, electricity) and what you ‘want’ (e.g. going to the movies, holidays), and make sure you spend less than you earn. As a rule of thumb spend 50% on needs, 30% on savings and 20% on wants.
  2. Saving – Open a savings account early – as soon as you receive a regular allowance or start working. Save three months’ income for a rainy day and pay for things you need before paying for things you want.
  3. Using credit – If you wouldn’t pay cash for it, don’t buy it on credit (including using buy now pay later facilities). If you do use credit, make sure you understand the interest rates, fees and charges.
  4. Making large purchases – Think about how you will pay for large purchases. If you can’t comfortably afford it, think again about buying it. Try not to compare yourself to others; only buy the large purchase if you can afford them.
  5. Retirement fund – Once you start working, it’s never too early to think about your retirement nest egg. If you start small and early with an extra 1 or 2% when you’re young you can leverage the magic of compound interest.
  6. Making investment choices – Start with simple investments like savings accounts, and don’t invest in the unknown. It’s important to understand the investment fees and charges that could eat into your returns.