David Boyle - Mint Asset Management

In 1978 my mum bought me a Sanyo 2-in-1 cassette radio player. It was a game changer for me. That’s because, before getting the player, my only access to music was listening to 3ZB, watching my fav bands on RTR and Radio with Pictures or buying a 45 when I could afford it.  Now, with this new player and the advent of cassette tapes, I was able to go to the next level and not only listen to my favourite songs but play them again and again where and when I wanted. For younger readers, it would have been the same feeling you had when Spotify first entered our world.

The trouble was it took me ages, and a lot of patience, to catch the radio announcer playing the song that I wanted to record. On a number of occasions, the DJ would talk over the song, or the news would cut in halfway through. It was so frustrating and hours of my life were spent getting the perfect recording.

The other challenge was that blank tapes were really expensive! In fact, my first blank tape wasn’t blank at all, it was a studio version of “Jesus Christ Super Star” which I ‘borrowed’ and taped over.  I thought I was doing mum and dad a favour to be honest. Unsurprisingly, that was the first and last time I did that. So, the only alternative I had was to save up my pocket money to buy a C60 tape - I was too tight to buy a C90 and had to make sure I recorded the songs that I knew would stand the test of time.

Scarcity is such an important element of financial education and is an easy one to teach our children at an early age.  However, many parents have not introduced it (unless they’ve had no choice) because they wanted to give their kids a little more than they may have had growing up.  With best intentions being the driver, it has negatively impacted our future generations and I am the first to put my hand up and say I should have, could have, done a lot better. Let me explain.

The silent generation

Growing up with parents who were born in the “Great Depression” (seriously there was nothing great about it) and living their informative years through the Second World War on the West Coast of the South Island, scarcity was a daily experience. It’s hard to imagine now, but back then finding a job was difficult, wages were low, the cost of goods and services were high, and just accessing daily basics was a constant battle for most families.

Both my parents left school at 12. They had to because their families needed the extra income, and they did so without even thinking. Mum worked in the cooperative store and dad was the delivery boy for the local butcher. It was something they looked back on with an immense sense pride, because they helped their parents get through some pretty tough times. One example that blew my mind was how dad had all his teeth removed at 13 because they couldn’t afford dental care, an extreme version of, quite literally, doing without!

 Baby Boomers and Generation X

When it was my parents turn to bring up a baby boomer (my sister) and a Gen X (me) they were in a far better position financially to provide a more comfortable lifestyle for both of us. However, they taught both Janice and myself a few important lessons:

·        The value of money - by having to work for our pocket money and savings

·        The difference between needs and wants - by only allowing us to have a few options to buy things, rather than giving us everything we wanted

·        The benefit of compound interest - by giving me 20 cents a week to pop into my school banking

·        Saving for a specific goal - in my case a skateboard they wouldn’t buy for me

And a swag of other money principles that I didn’t even know I was being taught until years later. What a gift that was.

Gen Y and Gen Zers

Before I start this section, it comes with a warning to parents my age and younger. What I am about to say won’t be easy to read, you may even disagree, and that’s ok.  I’m speaking generally to those parents who come from a relatively privileged background, where money, while worked hard for, has provided a lifestyle and environment for their children that is somewhat sheltered compared to many other families in New Zealand.

It’s this group of adults who have unknowingly contributed to lower levels of our younger generations’ financial capability.  The main reason is that they, like me, have given our children pretty much everything they wanted because we could. This in turn has reduced their levels of financial resilience when they can’t get what they want.

Then, when it feels too overwhelming and some children turn into demonic money munchers, we start blaming others for our problems. I often hear some friends and acquaintances saying: “We need financial capability in schools”, and I agree it has a part to play in schools, however financial literacy must start in the home. It really is your responsibility. I was never given a copy of “The Parenting Manual” however, if there is one, it appears this chapter has been ripped out, along with others like sex education, nutrition, and pretty much everything else we want schools to do for us now, in addition to their original academic objectives.

So what can parents do about it?

Five steps to bring financial literacy back home

There endeth the lesson. Here are some practical steps to get things real when building financial resilience for our next generations.

1. Value of money: Encourage your children to work for their pocket money. This helps them understand that money is earned through effort and work, not just a black electronic box you wave your plastic card at.

2. Delayed gratification: An oldy but a goody. Explain to your preschoolers they can have two lollies now or, if they wait an hour, they can have four. Show them the lollies and see what they do. If they take two right away, wait for an hour and then eat the four in front of them.

3. Use real money: Whenever possible, use physical cash for transactions with your children, especially when they are young. This helps them realise what the numbers really mean when purchasing something in the future.

4. Budgeting and pocket money: Consider giving your kids a set amount of cash that they are responsible for managing. This allows them to budget for their needs, wants, and savings.

5. Savings goals: Help your children set savings goals for both short-term and long-term objectives. Celebrate their achievements when they reach these goals, reinforcing the importance of saving.

It shouldn’t come as any great surprise that I still have that reincarnated “Jesus Christ Super Star” tape in a box packed away in our shed. Why?  Well, because after all those years I remember how long it took to make and the value it meant was just too strong to throw away. Even now Jerry Rafferty’s “Baker Street” still takes me back to the morning I recorded it, with a sigh of relief that it finished just before the 10 o’clock news, knowing I had got a keeper for life.

 Disclaimer: David Boyle is Head of Sales and Marketing at Mint Asset Management Limited. The above article is intended to provide information and does not purport to give investment advice.

Mint Asset Management is the issuer of the Mint Asset Management Funds. Download a copy of the product disclosure statement here.