Money Tips for Kids and Teenagers

MoneyHub explains EVERYTHING important about money now to set yourself up for life

Updated 4 January 2022

You may love chemistry, art, rugby or netball. Whatever your interests, the entire world runs on money. Many adults are clueless when it comes to understanding money, which means life can be stressful, tiring and frustrating. However, a few necessary skills outlined in this guide which you can learn at an early age will help you manage your money.

Know this first – we live in a 24/7 Consumer Society

We see and hear ads every day telling us to buy buy buy. We never see advertisements telling us to save up and buy something later.
Companies love to sell us something today and have us pay for it later – they expect you to pay interest on what you owe.
0% interest, zero repayments and, generally, anything offering pay later terms are debts that often cost you more in the long run.
It takes discipline to resist the relentless advertising – who doesn’t want a giant TV, Xbox or new clothes right now
The financial crisis in 2008, which made millions of people homeless, started by loans being taken out by people who spent more than they earned. Spending money you don’t have happens all over New Zealand, and it ALWAYS leads to misery.

Why have we published this guide?

We believe that financial literacy is lacking throughout New Zealand, and it's not based on household income. We want to share the same knowledge that wealthy parents teach their children, so everyone has the chance to avoid being a slave to debt.

Top 12 Money Mistakes that Make You Poor

We've put together our top 12 list of the most common money mistakes. Yes, we live in a 'have it now' world, but you don't need to make yourself poor and stressed by thinking you need to follow. Instead, relax and read our list to avoid common pitfalls. MoneyHub is well aware that many New Zealanders don’t know where their money is going - don't make these mistakes:

Overspending on credit cards – it’s easy to spend on non-essentials because you don’t see the money going out of your bank account per item. Unless credit card bills can be paid off in FULL every month, the debts incurred cost a small fortune.
Always buying the latest technology – new TVs, new iPhones and flash sound systems look good, but do you notice the difference after a few days? Worse than that, many people take ‘buy now, pay later’ offers – this means your $3,000 TV will cost over $5,000 and keep you chained in debt for five years.
Bling and Beauty – rich people don’t flash around diamonds, brands and new haircuts every week; look at Bill Gates and Mark Zuckerberg. ‘Fake rich’ is all around us, but it’s lame and the money spent doesn’t make anyone happy…other than the retailers!
Impulse purchases – do you need four phone cases, three watches and four perfume bottles? Marketing is INTENSE for this stuff, but unless it’s a need, you’re wasting money. And seeing heaps of stuff sitting around gets depressing.
Food waste – New Zealanders are bad with this – Food waste is a $1.8 billion problem in New Zealand - around an eighth of what Kiwis buy each week being thrown away. Rather than buy big, just buy what you'll use.
Games and In-App purchases – this can get out of control very quickly, with US$ here and US$7.99 adding up to NZ$200+ a month. Have restraint when you game and you’ll have more money.
Balling at a club – bars in New Zealand are crazy expensive; the real ‘boss’ is the owner of the club, not you. Spending excessively on a night out isn’t fun when you relive it on your card the next day.
Gambling – poor people spend the most on lotto tickets and instant Kiwi. The odds are bad and the success stories so few. It's basically a tax for poor people.
Smoking and vaping – $20+ for a pack of cigarettes means a ‘social’ pack-a-week-a-day purchase could cost $1,000 a year. Vaping is also expensive and not healthy.
Bank fees and overdrafts – banks make a fortune from overdrafts (see our overdraft guide) and fees. Pick the right bank account – zero fees, low transaction costs and freebies. Our student bank account guide picks the best options for those 18 and over.
Bad value insurance – when it comes to insurance, if you don’t compare, you’ll pay more. Our insurance guides help make sense of the best options.
Trying to look rich – fake it until you make it is a joke. The goal is to BE wealthy, not to LOOK wealthy. You are only going to drag around debt and worry at night.

Ten Must-Know Tips that Help Anyone Become a Master of Money

We outline the ten most important facts that let you navigate money life as a young adult. The message is clear - if you want a happy relationship with money, avoid impulsive purchases, shop around and don't buy the latest stuff.

Debt isn't always 'bad' - know the difference between 'good debt' and 'bad debt'

Debt CAN be good. Some debts make you wealthy, and some debts make you poor.

Examples of ‘good debts’ are:

Mortgages for a home you’ll live (if the repayments are affordable)
Student loan debt (if you graduate and get a high-paying job)

Examples of bad debts include:

Borrowing $2,000 to go on holiday to the Gold Coast – you’ll pay HUGE interest and won’t have money to save for the next holiday
Buying a $5,000 TV on 24 interest-free and no-repayment terms, and you don’t make any repayments and pay interest later, this is bad debt. The TV can easily cost over $8,000 by the time you’ve paid it off.
A contract on a new mobile phone – where the cost of the repayments exceeds the price of the phone, this is bad debt
Borrowing $5,000 from a family friend to invest in Bitcoin - this is borrowing money to gamble, which is incredibly high risk.

As you get older, when you plan to buy something and don't have the money, ask yourself - am I creating a bad debt, or a good debt? Some things can be good debt or bad debt, depending on the need of the loan:

For example, if you buy a car on finance which you need for a job, and there are no other alternatives, it is good debt (as long as it’s affordable).
If you don’t need the car for work, and only want it for convenience, it’s more likely to be a bad debt.

Make the Wrong Money Decisions Today and a LIFETIME of Financial Problems Await

In many school subjects, there is a right and wrong answer. For example, maths, chemistry and geography are black and white. But money is not like that. It’s uncertain and requires crucial judgment, so the sooner you get experience in dealing with money, the better off you’ll be.

We live in a competitive consumer economy. There is no debt education in schools – if you run up a $1,000 bill at 18 on a standard credit card and only make the minimum repayments, it will take you ten years (!) to pay it off. If you put $5,000 on a GEM Visa or Q Card and only make the minimum repayment, it will take you 18 years (!!) to pay it off. It’s scary stuff – being stuck in consumer debt in your 20s is bad, but in your 30s it’s terrible.

People will always buy stuff they can’t afford. The latest phones, new clothes, brand new car and big nights out. But they go home to bills to pay, which cause worry and health issues. School doesn’t teach you about avoiding the trappings of being an adult – and Instagram is full of fake lifestyle photos which doesn’t help self-control.

Understand the difference between Assets and Liabilities

For example, an asset is a house you own and rent out – your asset makes you money. A liability is a credit card debt for a holiday. Assets are valuable as they pay you money, whereas liabilities cost you money. If you have money in the bank, it's an asset. If your bank account is in overdraft, it's a liability.

People earning the same money can end up rich, while others will end up poor

The best way to explain this is with an example:

Matt and Max both earn $5,000 a month.
Matt spends his money on restaurants, car repayments, a new phone, clothes and the latest electronics.
Max goes out much less but invites his friends to his home instead, owns a second-hand phone, owns a used car and doesn't follow the fashion trends.
Max saves $2,500 a month, so each year he saves $30,000; Matt saves nothing and sometimes can't pay his credit card debt.
Max's savings grow with compound interest and has $500,000 savings! Matt still struggles to pay his bills. The trend continues to years to come and when Matt and Max retires, Max owns three houses where as Matt is renting.

What does this all mean?
Basically, you can spend your money to look risk, but you may end up poor. Wealthy people often look very ordinary, but they use their assets to make them richer. For example, their rental property pays for overseas holidays and renovations in their own home.

Learn how money works and how to work in the real world by creating your own business or work regular part-time hours (but don't let school suffer)

Babysitting, lawn mowing and dog walking are just some examples of in-demand jobs. Many companies hire students year-round. Our student jobs guide outlines how to take the next step. If you work for yourself, you can full control of when you work, which may be more suitable than committing to fixed hours.

Want to get a part-time job right now? We've made it easy. Our student job guide lists plenty of options. Our student CV, cover letter and job interview guides help you succeed in your application.

If you don't compare prices when shopping, you're probably overpaying

MoneyHub was founded with the purpose of comparing prices, and we spend a long time getting to know the different options available for everyday purchases. We invest a lot of time updating them to make sure people can compare accurately. If you are determined to get a credit card or car, read some of our most popular guides first:

Learn about saving and investing as early as possible

Open up a savings account - it's always free. While interest rates (the money you get for having your money invested) are fairly lousy right now, it's better than nothing.
Investing in shares is far more complicated, but you can learn some basics without risking money. The New Zealand Stock Exchange (NZX) has an excellent virtual platform which is free (and fun) to use. Investing needs a 5 to 25+ year timeframe, but having an understanding of shares from a virtual portfolio, and having real money in a savings account, is a great way to get smart about money.

Question 1: I’m always being told to save, but what am I saving for?

It’s impossible to think about retirement at 16, 17…so don’t. Saving has enormous benefits – having money lets you have choices and freedom.
Everything in life is EASIER when you have money — not saving limits what you can do. Saving as soon as possible helps you tomorrow. Generally, the best

Question 2: Why does my bank only pay me 1% on my savings when I see them advertising loans for 10%?

You may feel short-changed by lending the bank your money and seeing it lent out at high-interest rates.
However, the bank takes a lot of risks when it lends money – i.e. it may not be repaid.
This is why the riskier the loan, the higher the interest rate. Interest rates will be lower when you buy a house than they will be for buying a car because houses don’t drop in value like cars. The banks want to make sure they don’t lose out, so charge more interest to give them profits.

There is always more money, and you're not limited to how much you can earn

Whatever your salary may be, this is not your 'financial limit'. If you save and invest, rather than spend and rack up personal debt, your wealth will grow over time. You can then use that money that buy what really matters to you. There is no limit of money in the world - how much you make comes down to your choices and how you invest your time and income.

Avoid credit cards for as long as possible

Banks credit cards and high-interest finance options like the GEM Visa and Q Card all offer credit to anyone 18 or older. But even with a good grip of how credit cards work, it's all too tempting to overspend. Once started, it can lead to debt being dragged around for years to come.

Credit cards are best later on when you are in full-time employment. Banks love to issue credit cards - stay strong, resist and be proud to be above it all.

No one owes you anything - how much money you will have comes down to YOUR CHOICES

If you want to have money, you will only get what you deserve.
If you get a trade and start your own business, or go to university and get a good-paying job, what you can save, and how you spend your money, is your choice.
Every financial decision, big or small, has consequences. Being financially independent from your parents will let you manage your finances with purpose. For example, if you take on debt, it's up to you to pay it off. Parents all too often bail out their kids, but those kids continue to struggle with money.

Three Important (and Mostly Unknown) Facts About Money

Working for money, i.e. exchanging your time for an income, isn't the only way to make money. For example, if you start a business and hire people, you can make money from the business, with the work.
Delayed gratification is essential to get ahead financially. Buying things impulsively to feel better, or giving up on something when things are too hard, means you won't get anywhere. No one is rich or successful overnight. It takes a lot of time, patience and hard work.
The best way to make money is to help others. The most valuable work is that which solves problems. This is why medical work, engineering and legal jobs are well paid when compared to work such as Uber driving and working in a fashion store.

Further Resources - Workshops, Apps and School Activities

If you need further reading beyond the easy-to-action list above, some options exist. By including them in the list below, MoneyHub is not endorsing them in any way.

We suggest considering SquareOne, a pocket money/financial literacy app for children - our review has more details.
MoneyTime - MoneyTime is an online financial literacy program for children ages 10 to 14. The platform is free in 500+ schools, with paid use-at-home licences available. We suggest reading their dedicated guide for parents to learn more about this innovative platform.
Sorted in Schools – This government-led program is being rolled out to schools all over New Zealand - the website outlines what's on offer.
Young Enterprise – There are a select number of workshops that fall into the ‘financial literacy’ category, which can be accessed from the organisation’s website. By listing Young Enterprise, MoneyHub is in no way endorsing the business development and challenge programs.

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