Andrew Lendnal - Gold Start: Teaching Your Child about Money

Youve done your best to raise loving, sensitive, talented, compassionate children. Thats why you have picked up this book. They mean the world to you but, unfortunately, you feel you may not have done a great job of teaching them about money. And the last thing you want is to create further victims of Generation Debt a term coined by author Anya Kamenetz (and the title of her first book).

Todays twenty-something generation tends to be made up of highly educated individuals who are often mired in unmanageable debt credit cards, car and student loans. In Europe theyre known as the 1000-Euro Generation, a moniker credited to an Italian internet novel. This generation doesnt understand a lot about money, but does like to spend it. The result can be tens of thousands of dollars in debt that wont go away.

It doesnt take long for the typical university student, persuaded on-campus to sign up for that first credit card, to max it out and sign up for a few more cards, using them to buy clothes and university course requirements.

When the debt catches up with these students, they take out student loans to pay it off and help make ends meet. By the time they leave university theyre in a hole $20,000 deep. That doesnt stop them from taking out another ten (or 20) grand to buy a car.

A decade later, at 30, theyre still chipping away at their $30,000 tab. Although theyre saddled with debt and theres no end in sight, theyre not losing any sleep over it. They find it hard to save and are frequently tempted by nice clothes and the latest technology. They see this penchant for living beyond their means as a mark of their generation, one made up of those who will drop $4 on a coffee without a second thought and who pride themselves on having the latest gadgets.

Our grandparents understood the value of a dollar. They stashed coins in piggy banks and contributed to their savings accounts. That was before credit cards, and when borrowing money to buy a car was out of the question. What happened to that old-fashioned virtue, thrift? Weve taken the notion of living beyond our means to a whole new level, as we continue to live with debt and no savings.

Tertiary students may grow up with the illusion of a level playing field, but after theyve finished their studies, there are those with $50,000 in loans and those without. This is a generation hugely divided. Unlike the baby-boomers, these young adults dont have a collective feeling. They face a series of economic and social issues their parents and grandparents never encountered. Sixty per cent of student aid is in the form of loans and the national average student loan in Australia is over A$22,000; in New Zealand it is nearly NZ$20,000. Taking out a student loan is now a rite of passage.

Credit cards, too, act as safety nets for tertiary students. Many give themselves an unwelcome graduation present an average of $3000 in credit card debt at the time they receive a degree.

All this because we live in a financially illiterate culture where the financial crises of inexperienced spenders are regarded as simple mistakes! But theres no easy answer, no one-stop shop, crash diet or training regime to make you and your children fiscally fit.

Were not doing well with regard to money management. While some of the debt issues faced by younger generations can be addressed by more responsible money handling, a larger part of the problem lies in our ever-changing economy, and the urgent need for economic reform.

Here are some comments from parents, made with the benefit of hindsight.

Let me start by saying that my son has been involved in sport since he was very young. What that means in regard to money management is that its hard to work when you are constantly practising. I made a deal with him very early on that I would not give him any money; he would have to earn that himself. He did come up with a few entrepreneurial stints over the years, as a bush lawyer at high school and making custom CDs before the whole music downloading thing blew up. He once spent two weeks mowing lawns, which taught him the value of getting an education. For the most part, though, he didnt work. I wish I had made him get a regular job, even if it was only a few hours a week, because he would have acquired a work ethic.

My son is now in his final year of university and Ive finally insisted. I asked him, at 21 with absolutely no work experience, who did he think would hire him when he graduated and was waiting to be picked up by a professional rugby team. Its going to take a top Japanese club a while to find him and, in the meantime, he will be competing for entry-level jobs with other 22-year-olds whove been working since they were 15 or 16.

So now hes working in his first regular job, as a delivery boy for Pizza Hut. What do you know? He likes working! He has learned about the anxiety of the first day on a new job and how that is survivable; he has learned about tax being deducted from his pay and, most of all, he has learned that he has to go to work in order to support his lifestyle and because the other people who work there are counting on him. For these and lots of other reasons, I wish I had made my son get a job as soon as he was old enough to work.

When my daughter was small and doing occasional odd jobs, I did make her save some of her money. But I never set up a hard-and-fast rule about saving a certain percentage of her earnings. Now she doesnt have that habit and will have to figure it out on her own.

Along with not saving his money, my son doesnt know about budgeting. He is in his first year of flatting. I am paying half his rent and nothing else. Unlike the flat he had last year, he is also responsible for power bills. Last year he was forced to learn a little about budgeting when he had to start buying his own groceries. I know these are real-life lessons that we all learn at some point, but I wish I had better prepared him. On the brighter side, at least he is learning them now before he really gets out on his own!

I love the idea of giving a small child a dollar and then making her give some of it to someone who needs it more. I love the idea of taking my children to volunteer at the food bank or help out at the local SPCA. I never did any of that and I wish I had.

When my son was first going off to university I realised that, never having had a cheque account, he probably didnt really know how to use one. I was right! Before he left I sat him down and made him balance my cheque book. That was an experience for him. Among other things, he learned Mum