Teaching ‘money smarts’ to your kids is as important as teaching them good manners, like chewing with their mouths closed. I believe we’re failing as parents on both, but let’s talk about money smarts – financial literacy.

Being literate in finances is the same as being financially disciplined. Broadly speaking it means you’re working on four fronts all the time:

– Earning money: Work smarter, not harder – be willing to up skill all the time and this will eventually result in earning more. Those who are good at earning money generally have three attributes: They invest in themselves (education); they take risks; and they innovate (entrepreneurs).

– Saving/Investing/repayment of debt: Unless you’ve set a course now in debt repayment and investing, you’ll be in trouble later on (especially with retirement provisioning). Investing requires a little more effort and usually requires the assist of independent advisers but don’t let that put you off.

– Giving: Corporates get this and it’s not just out of pure altruism that large corporations donate to charitable organisations. There’s research out there showing the more you give the more you earn (in addition to feeling better about yourself).

– Risk management: The faster you go the bigger the mess (if the inevitable ‘wobble’ occurs). If your entire base of wealth is contingent on your ability to earn, yet you don’t insure it then not only is this foolish, it’s likely only a matter of time before the whole thing collapses. Acting prudently to avoid risk is one thing, but for the bit that you cannot control, some amount of insurance is critical – not optional.

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So do you rate pretty high on the above? Great! Let’s talk about how to transfer just some of these disciplines to your kids:

1. Get a piggy bank. Using cash is a thing of the past but may I give a plug to ASB with their ‘Clever Kash’? It’s an amazing way to still connect kids to the physical nature of cash – it’s too hard conceptually to get across the idea of money without a piggy bank.

2. Work first, and then play. Teaching kids how to defer gratification is a skill transferrable to all areas, but especially so with recreation – if you can show that you’ll always do a bit of work before you do something fun, they’ll value the fun times so much more.

3. Make your kids work for money. Pretty simple yet it’s astounding how many parents don’t give their kids’ chores – the younger the better too! Cleaning not only their room, but communal areas of you home, cut the grass, stack the firewood, clean the car. They’ll love spending time with you and if you step back and actually make them do everything, you’ll be surprised at what they can do.

4. Encourage them to save and to give. If they see that you’re doing this, they’ll do it.Get them enrolled in Kiwisaver and contribute regularly – don’t complain that there’s not government incentive – show your kids that their success depends on their actions.

5. Bring them along when you visit financial advisers. We love seeing kids in our client meetings – if mum and dad get advice and guidance, they’re more likely to as well and they’ll be more likely to succeed if they know how to leverage off the experts.

So there it is – Get yourself sorted in terms of your own literacy/skills/discipline, then teach it to your kids. It doesn’t matter if you’re currently a bit of a muppet with money either, as long as your kids can see you trying to move in the right direction. You want your kids to succeed and that’s natural but if you need one more reason to do this it’s this: right when you’re ready to retire is when they’ll come to you cap in hand asking for assistance for their first home – is that what you want, when you’re about to retire?