An essential life skill our schools, high schools, and even university, fail to teach our children, teens and young adults; is how to manage their finances.
If your child is taking a subject in school such as accounting, enterprise studies or economics, money management may be touched upon briefly in a theoretical sense but for the majority of students, this life skill is never covered.
Money management is something usually taught on it’s own when your kid gets their first job or when they begin to incur their first living costs and money management seldom ever includes savings in their eyes.
In this article, I talk to Luke, a 16-year-old who has just landed his first part-time job working in hospitality. Luke was given a formula by his parents that emphasised the importance of savings from his first paycheck. The formula also has an emphasis on what he wants to spend his money on, and what he needs to spend his money on, such as general expenses.
Luke’s paycheck is split into 5 different categories:
- Savings – 30%
- Car – 25%
- General Expenses – 20%
- Music Gear – 15%
- Generosity – 10%
Once Luke receives his paycheck, he divides this up manually and transfers the money into the appropriate accounts. He says that so far, he has never been in dire need of money, has rarely reached $0 in any account and hasn’t needed to change his percentages.
“My general spending is what gets used up the most with general bits and bobs such as food and clothing. I probably spend the most on music gear (guitars, amps etc.) as that’s my passion. I have several guitars and each one serves a different purpose. I like to have options when it comes to music.”
“The main thing I’m most pumped about in terms of my savings is the ability to buy a car when the account reaches $2500-$3000. This will enable me to get a car big enough to carry all of my instruments and my friends’ instruments around in, which would be awesome. I’m also looking forward to the freedom of having my own means of transport.”
What’s next for Luke:
“I have been thinking of going to university to major in jazz guitar and minor in Maori. However, I’m also thinking of taking a gap year prior to this to ensure it’s what I really want to do.”
“I then want to teach at a secondary college as a Music Teacher and teach a night course that is either free or heavily discounted for adults wanting to learn the Maori language.”