MONEY, MONEY, MONEY

SURE, YOU KNOW HOW TO READ AND WRITE, BUT HOW LITERATE ARE YOU WHEN IT COMES TO MONEY? IT'S MORE IMPORTANT NOW THAN EVER BEFORE FOR KIDS TO BE CLUED UP ABOUT PERSONAL FINANCE. ACTV8 INVESTIGATES.

Money. Donald Trump has so much of it he probably shampoos his famous hair with it. But whether you have a little of it, or a lot, one thing's for sure - you need it to get through life. The old saying ‘money makes the world go round' exists for good reason. After all, just about everything in this world requires the almighty dollar. From basic necessities like food, shelter and clothing to fun stuff like the latest PlayStation 3 game and brand new sneakers, there's a cost attached.

Nope, we can't do without money, and that's why it's really important to be clued up about how to use it best. Understanding budgeting, investing, debt, interest, credit cards and saving are all part of being financially literate.

A financially-literate person is able to make good, well-informed decisions about the use and management of money. No matter what your age, this is an essential skill. And of course the younger you start learning about money, the better you'll be placed for the future!

Busted

Unfortunately many Kiwi kids (and even some adults) flunk financial literacy. In fact according to an ASB SmartStart and Young Enterprise Trust Survey run in New Zealand earlier this year, 75% of 8 to 12 year olds either didn't have a bank account or rarely used it. Even more worrying was the fact that 13% couldn't name one bank or financial institution, and over half thought their financial independence would come from ‘luck and a bit of planning'.

Kiwi kids aren't the only ones behind when it comes to financial literacy; it's actually a worldwide problem says Lyn Morris, the Young Enterprise Trust national director of financial education. "Poor levels of financial knowledge and competency in teenagers are universal, especially among western countries, but now it's becoming common in many other countries as well." That's pretty scary huh. How on earth did young people become so clueless about money?

Money 2.0

Today's kids need to be far savvier about finances than kids 30 years ago. In the past few decades the world of finance has been overhauled. You know, when your Mum and Dad were children, Eftpos cards and ATM cash withdrawal machines didn't exist, and online banking would have been a concept as absurd as aliens tap dancing on the roof. Now it's the twenty-first century and money can be accessed 24 hours a day, via a computer, a telephone or a hole in the wall. There are far more choices to make about money and more opportunities than ever to spend it. Plastic cards are commonly used and nearly everything can be bought online. The result is that sometimes money just doesn't feel ‘real', since we can't see it. We live in a society where credit cards, hire purchase agreements, loans and debt are all perfectly normal.

So the way money is handled and attitudes towards it have changed drastically, and on top of all that young people today are required to make financial choices much earlier in life. This is why it's so important for kids to learn money skills.

Hey big spender

‘Prematurely affluent teenagers', it's a term that's popping up a lot in recent years. But what does it mean? It refers to the excessive spending habits many teenagers have developed due to the availability of money. (Credit cards are a major culprit). The problem is that many of these teenagers are enjoying the ability to spend up large, but without being responsible for the real-life responsibilities that accompany this (interest, debt, bad credit).

FED up no more

Fortunately, financial literacy was added to the New Zealand education curriculum late in 2007, which means schools are allowed to teach money skills in class. Speaking of classrooms, FED (Financial Education) is a school-based programme run by the Young Enterprise Trust. Its mission with FED is to teach students how to manage money in an interesting and hands-on way. FED has been running in schools since 1996. Course material includes games, undertaking investigations (see, it doesn't need to be boring) and practical opportunities for kids to make financial decisions and learn about setting personal financial goals.

So the good news is that your school, and programmes like FED, can help you to mind your dollars and cents (or should we say sense). You can also do some independent learning at home, using wonderful resources like the website sorted.co.nz. There you'll find a fun ‘Kids and Money' section and also a ‘Students' section with great advice to point you in the right direction when it's time to start thinking about university and all those other great things the future holds.

If Lyn Morris from the Young Enterprise Trust had to pick the two most important things that Kiwi kids should know about money, she says it would be the universal ideas of, "Don't spend more than you earn", and, "Save a portion of your money each payday". That's pretty smart advice eh