Content creator Hannah Koumakis, who lives in New Zealand, explained how implementing the pocket money system (taught by her father) helped her to set long-term savings goals at 7 years of age. This enabled her to buy a car at 16 and a house at 23.

The pocket money system helped:

"...teach us the value of each dollar and to make us completely in charge of our finances from such a young age."

• to teach prioritization skills, budgeting and money management skills

"...we actually had to split off our pocket money into different accounts. We didn't just get the full $140*...we had $70 for long-term savings...which obviously left us with $70. And then we didn't just get that $70. We also had to pay $14 towards our church, which is tithe...And then we also had to put aside $20 to short-term savings...for our car. So again, at the age of seven, they were making us save for our car, which left us with $36 and $36 had to cover everything that we wanted in our life...from socks to underwear to clothing, to if we went out to McDonald's."

What do you think about this episode and Hannah's pocket money system?

Could this help with teaching your kids how to set long-term savings goals?

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*NZ dollars in 2007

Setting money goals can help teach responsibility and discipline. Barry Choi, Personal Finance and Travel Expert, talks about the money goals and money memories from his teen years.

First job:

"My first paying job...I was probably 16 or 17. It was data entry. It was at my uncle's company, and he was the CFO. So obviously that's how I got that hookup..."

First purchase:

"So, when I got first access to my debit card...I immediately spent half my savings, which wasn't a lot. In high school...PlayStation had just come out. It was the biggest thing ever. I spent all my money on that. But then once I got a consistent job, I was probably like 18,...that's when I started to save. And the reason I started to save...is because my parents encouraged me to open up an RSP...at the time I was only setting aside $25 or $50 a month, but...that's when I became a saver."

"...I keep talking about this PlayStation and how it blew my savings, but I got so much joy out of it. I think it was worth it. And this is what I was saying... If you set aside for your goals and you spend guilt-free after, don't feel bad about it."

Money Mindset

"Just knowing that money is there to work for you...So, if you can earn more money, obviously that's more beneficial. For most people, having a high income is the best, but once you start investing your money, the power of compound interest can go a very long way. So generally speaking, if you can invest early, save early, you'll be set up for financial success."

For more information about Barry Choi, visit his website MoneyWeHave.com.

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Should our kids use a debit card vs. cash? Finance and Travel Expert, Barry Choi (MoneyWeHave.com), talks about this topic and the following:

• introducing basic money concepts to young kids

"One basic thing...it's like an ice cream truck comes around every single day...it's like $4 a cone, but we can buy a giant bucket for $8. So, it's like, 'listen, you can get two ice cream cones from the truck, or you can have a bucket that will last you a month.'"

• debit card vs. cash

"...depending on the age of your kids, cash is still king...it's very important for kids to understand [that] this is the money you currently have [and that] if you start spending it, you're going to start losing it...

"...studies have shown that when you're paying strictly with credit or debit, you typically spend more. But if you're using cash, you'll physically see money disappearing from your wallet, purse,...

"So, despite the fact that we're going towards a cashless society or contactless society, I still think it makes a lot of sense for kids to use cash. So, as a parent, maybe you give your kids a cash allowance, instead of debit. That said, I would say once your kids are in a double digit, just like 10, 11, you want to start introducing them to their own debit card...[and] hopefully before you get to that point, you've taught them valuable lessons about money, so they don't feel inclined to just start withdrawing all their funds from the bank account."

• spending limits

For more information about Barry Choi, visit his website MoneyWeHave.com.

What do you think about this episode and the debit card vs. cash question?

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