The role of parents in financial education

[mashman]

Er what you end up with are adults that understand not to borrow over and above what they can't afford to pay back no matter what the economy's doing.
And I think you'll find that people that have this knowledge are just fine at the moment.

Saving doesn't mean no spending in the economy - it means very little personal debt owed to anyone.
20 years ago i started financial life with 10k that id saved on low wages, first deposit on a home that needed heaps of work, only the new roof and foundations were any good and the commute to work was tough, rates were at 13%.
20 years later ive bought and sold homes and property with a heckload of hard work, short mortgages and very little personal debt now, if any.

6 months ago I walked my son through a mortgage scenario on current lending rates.
His own conclusion to payment solutions was varied, but overall his own response was not to buy the 400k home, start small.
He's also saved a portion of his pocket money that he earns for two years so that he was able to afford a big ticket item.

I'm pretty happy with that and I know already he's on the path to financial literacy.
You see, somewhere a long the line people started ticking credit and letting it get so far out of hand, very much part of the problem we have now, not all, but almost preventable.
You are still in control of how your money works, well you should be, whether it's invisible or not.

Those adults are the tip of an iceberg, which really is my point. Yes there are plenty of people out there who push themselves to the edge of what they can repay, but at some point in time they have been able to make those payments. Things change in their life and everything falls apart and the finger wagging crowd start wagging their fingers saying how financially illiterate they are... where in all honesty, they've been fine and it's the unknown that has pushed them into the rock and hard place situation.

If we all start saving, then what happens to the economy? How many businesses will go under as people decide it's not worth while pushing themselves to their credit limit just in case they lose their job, or that inflation rises to a point where the bills suddenly become unmanageable where once they were. Being taught financial literacy and then applying it in perfect conditions is a lovely sentiment, but we never have perfect conditions. There are consequences to saving that are not part of people's every day financial literacy. Why are they not being taught? or even on the agenda for that matter? People saving = people losing jobs = people saving less = people being financially overexposed = more people in serious debt etc... It happened recently, you may have noticed and those at the helm were exceptionally financially literate. It shouldn't have happened.

Financial literacy is a bollocks catchphrase that too many are swallowing as some form of panacea, where there is empirical evidence that the financially literate fuck up every 10/15 years. The case of the Irish billionaire that lost over 4 billion euro springs to mind, SCF, Hannover Finance blah blah blah... all financially literate, yet they've plunged thousands of people into the shit through no fault of their own. It's bullshit and lies. Don't buy it.

[mashman]

Once again - utter nonsense. Most kids don't have a clue what 13% APR actually means. Choosing the right mortgage, loan, pension, life insurance, payment protection, is confusing for adults. A lot of kids wouldn't have a clue what any of it means unless their parents gave them some pointers.

From your line of thinking why bother to educate them at all- they will muddle through life one way or the other eventually. I think you need to print that badge out, stick it on your screen and read it before starting another of your bizarre threads.

One is moderately amused. The single question that most adults ask is, what is my payment going to be. Believe it or not, that is more than enough. In regards to cover, a simple question is, what does this not cover. A lot of kids can ask those questions and then figure out if they can afford the repayments. Job done!

Then you don't understand my line of thinking and refuse to see that even the experts fuck up. Ya see, it's not the knowledge, or lack of, that's the real danger. Can you grasp that concept? Once you have, factor in the number of people that have to struggle for a living, not because they have debts, but because they are not paid enough to cover the basics, let alone considering a mortgage that they'll never be able to afford because of the persistent rise in the cost of living and the persistent misnomer that growth is required for human beings to survive. I know you won't get that far, not sure if that's because you are incapable of doing so or not, or whether it's sheer bloody mindedness that has you defending an ultimately flawed system.

I ain't the one that needs the badge. Muddling through life should not be a punishable offence as it has been very successful for many people.

[Edbear]

Handling money is easy.

Save 10% of everything you earn. DO NOT TOUCH THIS MONEY! Save up and pay cash for basics, ie: do not put anything on HP unless it is sensible for business where you can claim GST and capital expenses. However even then, do not commit the business beyond its means and do not count your chickens before they hatch!

Do not commit more than 20% of income for major purchases such as a house.

All this requires is self-discipline and patience. Start as soon as you are old enough to earn money and continue through life. You will be rich and materially secure.

The sole reason for the GFC and anybody's financial disasters is greed and/or impatience. If you can afford to pay off on HP 30-50% more for a bike than it costs, you can afford to save up for it.

If my father had taught me this when I was young I would be rich by now. However I made the usual mistakes of wanting stuff now and booked them up on HP's. Took 25 years to get out of the crap.

[mashman]

In response to a deleted post:

I agree about the planning thing, said so in the OP. My question still stands. How does saving v's spending affect the economy?

I'm not saying that NO spending goes on, but if you're only going to buy the essentials because you are being prudent (rainy day/pension/whatever unexplained event etc...) then you're not going to be spending on iPads, phones, TV's, jewellery, new cars, houses etc... These "industry's" employ people and pay for those people using the funds that job public spends. If joe public isn't spending, what happens to the jobs? and what is the knock on affect etc...?

Investments are another thing entirely and I doubt there are that many people who can afford to invest as many people can't afford to save in the first place. They gambled and we bailed them out. Wrong on so many levels, but they had protection insurance, I'm over it.
And you're ignoring the real life scenario's of many others. If you had have listened to me 20 years ago, we wouldn't be having this conversation as money wouldn't exist and these issues wouldn't be a consideration that rule people's lives.

[Banditbandit]

Ata marie

You obviously jumped queues when you immigrated, this place was built on hard working crofters, the whining ingrates and petty thieves are supposed to go to Australia.

Sorry - many of them came to Godzone one step ahead of the law .. a whole lot more came here after escaping in Oz .. and even more came here after their sentence was up ...

I'm pretty sure I'd find that offensive if I were Maori but I'm not. As you were.

Yeah ... maybe ... It took me a while to figure out what you meant - aroha mai .. Monday morning-itis .. In the context it was said, then no ... it's tto that offensive ... but in general? Yes, I would find it offensive ...

Aside from the fact that there are no pure blood Maori left, and given their European ancestry, are there any "Maori" who would care to comment?

And just how many pure blooded Europeans are there then?

All this racial crap is doing nothing for this country.

No - I'm sorry but that's a one sided view .. along the lines of "You Māori should shut up because you're harming race relations" .. well sorry, race relations are pretty poor ... what that staement really means is "Shut up - you are pissing off us white people ..." Well Osrry .. but Māori are pissed off ..

[Edbear]

Ata marie

Sorry - many of them came to Godzone one step ahead of the law .. a whole lot more came here after escaping in Oz .. and even more came here after their sentnce was up ...

And just how many pure blooded Europeans are there then?

No - I'm sorry but that's a one sided view .. along the lines of "You Māori should shut up because you're harming race relations" .. well sorry, race relations are pretty poor ... what that staement really means is "Shut up - you are pissing off us white people ..." Well Osrry .. but Māori are pissed off ..

That is my point. I am a pure bred Kiwi; English, Scottish, Spanish, Danish, (royal family), Creole Indian and Irish. 4th-5th generation New Zealander. How could I possibly be racist?

The Treaty was signed between the Indigenous Maori signatories and the Crown and I have no issues with honouring the Treaty, it was a legal document.

What I have issues with is that so many claim their Maori heritage on the slightest of grounds to expect special treatment and/or to attack non-Maori as interlopers regardless.

With the pace at which the races integrated, why are not all NZ'rs cherishing their whole heritages? Most of those claiming their Maori heritage would be far less than half Maori blood and probably as much Scottish, Irish or English as I am, even Chinese, for pity's sake.

Like I said, racism is stupid!

[Oscar]

If we all start saving, then what happens to the economy? How many businesses will go under as people decide it's not worth while pushing themselves to their credit limit just in case they lose their job, or that inflation rises to a point where the bills suddenly become unmanageable where once they were. Being taught financial literacy and then applying it in perfect conditions is a lovely sentiment, but we never have perfect conditions. There are consequences to saving that are not part of people's every day financial literacy. Why are they not being taught? or even on the agenda for that matter? People saving = people losing jobs = people saving less = people being financially overexposed = more people in serious debt etc... It happened recently, you may have noticed and those at the helm were exceptionally financially literate. It shouldn't have happened.

This is where your ignorance becomes laughable.
Are you seriously saying that saving causes inflation and job losses?
Where do you think that the money goes? In a vault somewhere?
It gets put to work. One of NZ’s chronic long term economic problems is our low savings rate (particularly when compared to our trading partners like Japan and Australia). We lack the money for development so that our housing boom and business expansion ends up being funded by Belgian Dentists and Japanese Housewives. If anything adverse happens in these markets, the money dries up and then we experience unemployment and stagnation.


Maybe you should try and become financially literate before shooting yer mouth off..

[mashman]

This is where your ignorance becomes laughable.
Are you seriously saying that saving causes inflation and job losses?
Where do you think that the money goes? In a vault somewhere?
It gets put to work. One of NZ’s chronic long term economic problems is our low savings rate (particularly when compared to our trading partners like Japan and Australia). We lack the money for development so that our housing boom and business expansion ends up being funded by Belgian Dentists and Japanese Housewives. If anything adverse happens in these markets, the money dries up and then we experience unemployment and stagnation.

Maybe you should try and become financially literate before shooting yer mouth off..

Only because you can't/don't comprehend anything other than your own understanding... but let's see where the rest of your post takes us.
Nope. But people not spending does.
The money goes to many places, a large chunk of it goes towards paying off debt.
Oh dear. If the money is put to work and doesn't disappear into people's bank accounts, then can you explain to me how the money supply can dry up? You deserve your badge.

Maybe you should think in more holistic terms.

[mashman]

Still waiting for someone to explain to me how saving is good for the wider economy where growth relies on spending... and how being financially literate solves that problem.

[Oscar]

Only because you can't/don't comprehend anything other than your own understanding... but let's see where the rest of your post takes us.
Nope. But people not spending does.
The money goes to many places, a large chunk of it goes towards paying off debt.
Oh dear. If the money is put to work and doesn't disappear into people's bank accounts, then can you explain to me how the money supply can dry up? You deserve your badge.

Maybe you should think in more holistic terms.

People spending up large causes inflation.
That's the first true thing you've said.
Good for you.


You still appear to have no idea how the financial system works.
When money is tight it's because people aren't saving.
If people pay off debt (which many do as alternative to saving as the net return is better), where do you think that money goes? The money is available to be borrowed by someone else...

As for saving - how can money disappear into bank accounts?
Do you think the bank sticks it in a vault somewhere?
Under the mattress?
For someone who constantly wanks on about reforming the financial system, your understanding of it appears to based on a Scrooge McDuck comic.

[Banditbandit]

With the pace at which the races integrated, why are not all NZ'rs cherishing their whole heritages? Most of those claiming their Maori heritage would be far less than half Maori blood and probably as much Scottish, Irish or English as I am, even Chinese, for pity's sake.

Like I said, racism is stupid!

Yeah ... but blood quantum (or similar) is not a Māori idea ... that has always been a European-derived idea ... we do not buy into it .. if you are descended then you are one of us ... Blood quantum never matters to us ... it does, however, seem to matter to Pākehā ...

Of course we cherish our whole heritage - this is called Whakapapa ... and often we know it all ... a Māori friend of mine can tell you the English town his great grandfather emmigrated from, the street and house number ... How many Pākehā New Zealander's know that abotu their families?

[Banditbandit]

With the pace at which the races integrated, why are not all NZ'rs cherishing their whole heritages? Most of those claiming their Maori heritage would be far less than half Maori blood and probably as much Scottish, Irish or English as I am, even Chinese, for pity's sake.

Like I said, racism is stupid!

Yeah .. but blood quantum (or similar) is not a Māori idea ... that has always been a Eurepoean-derived idea ... we do not buy into it .. if you are descended then you are one of us ... Blood quantum never matters to us .. it does, however, seem to matter to Pākehā ...

Of course we cherish our whole heritage - this is called Whakapapa ... and often we know it all ... a Māori friend of mine can tell you the English town his great grandfather emmigrated from, the street and house number ... How many Pākehā New Zealander's know that abotu their families?

[scumdog]

Food for though plus true story.

In 'my day' you had to have 2/3 full price of a vehicle for the deposit if you wanted to buy it on H.P. (Unless it was a ute - then it was 1/2 the price for the deposit)
If you were under 20 years old (from memory!) you also needed parental consent as part of the H.P. agreement.

Then with deregulation at 17 you could walk in off the street and buy a car on H.P. with only $1 deposit. (hypotheticaly) and drive off - as long as you had a job.

True story: boy goes into Slick Sids car-yard, plunks down $500 and drives off in $5000 car, goes to Mags&Tyres and gets 17" blingy rims and low-profile tyres fitted - on tick
Then does the rounds of Mr Tint, Audio-shop etc and has tinted windows, killer sound system, body-kit etc - all also on 'tick'

Then about a year later the car looks scruffy, tyres are rooted, motor fumes, a couple of speakers blown etc.

So off he goes back to Slick Sids and uses this car as deposit for a newer, more powerful car, does the rounds of the accessory shops as before and now has a flash-as noisy new car to pull the chicks with (he hopes)..

And is still paying off the old car + the new one and the bits and bobs on tick.

Then one day gets some nasty news that let him know he is 20K in the poo, the interest rate and penalties are climbing - and he can't see how the hell on his Mac-wages he will ever be able to pay that amount off.

So he finds a tree branch, an electrical cord and ends it all...

Take from that what you will...

[Oscar]

Yeah .. but blood quantum (or similar) is not a Māori idea ... that has always been a Eurepoean-derived idea ... we do not buy into it .. if you are descended then you are one of us ... Blood quantum never matters to us .. it does, however, seem to matter to Pākehā ...

Of course we cherish our whole heritage - this is called Whakapapa ... and often we know it all ... a Māori friend of mine can tell you the English town his great grandfather emmigrated from, the street and house number ... How many Pākehā New Zealander's know that abotu their families?

It's actually quite interesting that white New Zealanders are often very concerned with their Whakapapa.
I don't know how many I've met who claim to be related to the Old Kings of Ireland or Scottish Royalty or who claim to be full blooded Cornishmen, and so on..the same as every Aussie has a relo who was on the first fleet.

My take on this is that the Europeans who landed here were desperate to get away from the class system, and that the English, Welsh and Scots who were in the vanguard to NZ were solid yeomanry (basicall one level above a peasant). Their descendants therefore lack any heritage and either guild the lily and/or are jealous of those who can trace their lineage back many generations...

[Edbear]

Yeah .. but blood quantum (or similar) is not a Māori idea ... that has always been a Eurepoean-derived idea ... we do not buy into it .. if you are descended then you are one of us ... Blood quantum never matters to us .. it does, however, seem to matter to Pākehā ...

Of course we cherish our whole heritage - this is called Whakapapa ... and often we know it all ... a Māori friend of mine can tell you the English town his great grandfather emmigrated from, the street and house number ... How many Pākehā New Zealander's know that abotu their families?

Maybe it is a European thing.

I do regret that I don't have any Maori blood, as being more recent to my genes means I would not be so pasty white! While the Spanish does come out in some of us it is not really enough to give us that nice olive colour and it is more the English and Scottish ancestry that colours our skins.

I guess I just deplore that there is such a racist attitude on both "sides" when there really are no "sides" to take.