A gift money can’t buy? Teaching your kids to save

When Alice Pearson was younger, she never gave much thought to saving. Sure, she put money aside sometimes to go towards a car or an overseas trip, but the idea of saving for the long term wasn’t something that crossed her mind.

Fortunately, her husband Caleb – with whom she found fame in 2013 on reality renovation show The Block NZ – has always been a keen saver, and together they’re doing all they can to help their children understand money and how to manage it from a young age.

“It’s really important for us as parents to educate our children about finances,” says Caleb. “It’s not just, ‘I have some money and I get to spend it’. It’s about habits and principles to guide them, so that they’ll use their money wisely and become more responsible and independent as adults.”

To teach their children in a “real, tangible and easy way,” the couple have a pocket money initiative, where the kids are paid their age in dollars, which is then divided into four separate jars each week.

“Alek gets $7 and Mika gets $5,” explains Caleb, adding that Blake, 20 months, and four-month-old baby Brooke will get the same once they turn five. “Ten percent goes into Tithe, 10% goes into Seed, 10% is put into Save and the final 70% goes into Spend.”

The Tithe jar teaches their children the importance of giving first to the most significant thing in the family’s life, their faith. The Seed jar teaches them about generosity and the importance of using their money as a way to help others. The Save jar, which isn’t to be touched until they’re 21, teaches them that money can grow if left alone. The Spend jar is available for their children to use as they wish. Alice admits it was nerve wracking at first giving Alec and Mika responsibility over their spending money, but the children have made her proud with their choices.

“At first I thought it was all going to be spent at the dairy, but they’ve learnt if they wait they can save up for something they really want, like a good Lego set or books.”

Recently, the children had a mufti day at school to raise money for the Tonga relief effort. Rather than grabbing a gold coin from their parents’ wallets, Alek and Mika were able to donate their own money.

Says Alice, “Our kids went with $8 from their Seed jars and they were so excited it was their money they were giving to someone else.”

While the couple don’t use jars for their own money of course, they structure their finances in a similar way. And they try hard to include their kids in “positive conversations” about money.

“It’s all about teaching our children that there are percentages of our money, the same as theirs, that we invest and save and tithe and spend. It’s actually quite a simple framework.”

All of these efforts are working towards the end result of raising financially responsible adults.

“The ultimate goal is when they get their first pay cheque, they’ll know what to do with that money and how to spend it well. We are starting with habits, which we know will set them up well in the future. And I think that's a really important gift to give to our children.”