Give the kids a financial blueprint

If our children left high school (college) knowing the fundamentals of money management, investment and insurance, not only would they better prosper as individuals through making smarter financial decisions but the nation would undoubtedly develop as a collective.

One man’s wealth is not necessarily another’s poverty.  It is not a zero sum game.  Currently rising middle class prosperity is raising minimum standards internationally.  Notably India and China.  We need to take heed and accept that increased productivity does not emanate from increased welfare.  We know that intuitively at home with how we assist our own but for some reason we consider a government that ‘gives’ as a government that cares.  Tough love develops rounded individuals and it works well in many people’s homes – but tough governments lose elections.  The secret at home is a balance of good cop bad cop – tougher with single parent homes but possible all the same.  When it comes to governing whether business, corporate, local or central government it comes down to astute stewardship – a mix of management and leadership.  The larger the numbers the more likely the conflicting interests and divisive opposition.  Who would want to be a politician?

What might a financial blueprint look like.  Well how about these as core learning outcomes:

• Demonstrate an understanding of factors affecting financial goals for retirement and financial freedom
• Prepare a personal budget
• Demonstrate an understanding of professional advisers and their roles
• Demonstrate an understanding of the functions of the various types of financial institutions in New Zealand
• Demonstrate an understanding of the various types of bank accounts and their uses
• Identify and explain an appropriate personal risk profile and the implications of this on types of investments selected
• Demonstrate an understanding of various financial products that can be used for wealth creation and retirement
• Demonstrate an understanding of considerations involved in selecting insurance and of types of insurance
• Demonstrate an understanding of the use of trusts as a form of asset protection
• Demonstrate an understanding of key considerations involved in estate planning.

The fundamentals of financial management never change.  When you control cash management your life magically de-stresses.  When you gain confidence with investment you improve cash management (because you better understand it’s positive and negative implications) and you become proactively focused on the future – you set financially achievable goals.

When you seek certainty through risk management you possess a more mature attitude and understanding around the risks of life as you pass through various life stages.  You wish to manage or offset personal consequential loss (a negative affect on your net worth).

If all this sounds overly complicated or too hard, think again.  The study material and certification in money management already exists.  Aotahi Ltd are the developers and authors of the Te Wanaga O Aotearoa certificate in money management.  Aotahi is a Māori-owned business education company specialising in developing and managing educational programmes and resources for entrepreneurs and small businesses in New Zealand.

When I found this material (shown to me by a relative who was proudly attending Wananga night classes in Palmerston North) it took my breath away.  I have never seen better prepared and simpler to understand material through my career.  It is first class stuff.  My aim is not to patronise the Wananga or the authors of the material nor demean our current public ‘mainstream’ education system.  What it backs up from my perspective is an example of what can be created when innovation and creativity is able to prosper outside formal ‘government’ decreed protocols.

The naysayers can point to funding and question prioritisation – allocation of public fiscal spending.  I say ‘what price – lack of education’.  The Wananga are available for all.  It is not restricted by race or religion – what a gold mine for learning and opportunity.  How about we get some of this stuff into earlier schooling – is that beyond question.  I hope not.  I’d like to think that in time we could see and understand the practical teaching capabilities coming through the Wananga being used within the current education mainstream system.  If that’s too big a cross to bear or mountain to climb then get Aotahi or an equivalent to rewrite ‘the blueprint’.  We improve personal financial literacy, we reduce one of life’s major stressors to individuals and families and we progress as a nation

The information provided in this blog is not intended to be a substitute for professional advice. You may seek appropriate personalised financial advice from a qualified professional to suit your individual circumstances.