As I open offshore tax free investment accounts for parents and sometimes their kids, I am often shocked to realise how we teach our kids to get into debt. Noko* is only 15 years old. Part of the FICA requirements when I invest funds for customers is that I get bank account details. Her mom sends me her bank statement as proof of her bank account. I review it and in summary this is what I gather;

1. Noko does NOT have a fixed amount of pocket money
2. Mom [a top earning executive] deposits R1 500 into her bank account on the 25^th of each month by stop order  
3. Noko starts spending the money – buys clothes, take – aways, etc…
4. Mom deposits another R500 around the 10^th of the month – I ask why she does this and she shrugs, she doesn’t see why not
5. Noko continues to spend as usual, more take – aways, burgers, ice cream, etc…
6. Dad deposits R500 somewhere around the 18^th of the month & Noko continues to spend

Conversation with Noko’s mom
Shaking my head, I ask for a telecon with Noko’s mom and this is how the conversation goes;

• How much is Noko’s pocket money?
• Mom answers “ R1 500”
• Don’t you think that is too much for a 15 – year old?
• Mom hesitates a little and responds “ No, kids get quite a bit of pocket money these days”
• Why are you teaching Noko to be a spender?
• No I am not,…..
• You are, she is spending ALL the money you give her monthly and in fact, her pocket money is NOT R1 500, it is R2 500 on average, based on the statements you gave me. I give her the dates when she and her hubby deposited additional R500 each into her account. You must ask Noko to save some of the pocket money monthly. If she doesn’t learn to save now, she will have a hard time learning to save and invest money when she starts working

Sad to say I see a lot of young adults in their 20s, 30s and they are spending ALL their incomes and more. They have credit cards, overdraft, revolving credit, etc.. and they struggle to save even a lousy R500 a month. Some even still run to mom and dad during the month asking for petrol money, and other stuff

If you want to teach your kids to save and invest money, I invite you to contact us at info@thuthuka-sa.co.za and we can open an offshore tax free investment account for your child. Let the debit order run off their bank account. They can start investing R500 monthly and will buy into companies e.g. Facebook, Apple, Amazon, Netflix, Google, Twitter, etc… This should teach them that they should save / invest part of the money they have, from a young age. Lugotshwa luse manzi

*Noko is not the teenager’s name – details changed to protect confidentiality of the customers