I like David Seymour's idea of teaching children the basics of money management by giving them $500 each. He floated the idea during a speech at a business event in Christchurch. The way it would work: the roughly 60,000 Year 11 s in this country would be given $500 in a controlled investment account with a structured pathway into real investing, possibly supported by investment platforms Sharesies or Blackbull. In term one, they choose a term deposit, a safe investment, but one that introduces the basic idea of storing capital so it can be used by someone else to produce, earning a return for the investor. In term two, they invest in a managed fund. This introduces the idea of risk. In term three, they invest in New Zealand equities, which introduces the idea of companies, and in term four, they're able to invest in assets from around the world, and all of a sudden, they learn about exchange rates and how much they matter.  

The ACT Party Leader said there would be regular tests of students' knowledge, which would establish whether they could progress to riskier investments. He suggested any returns could be placed in a student's KiwiSaver, it could be a credit on their student loan, or be given to them in cash. He proposed the initiative, which would cost about $30 million, could be funded from the roughly $600 million KiwiSaver annual subsidy. He said, well, you might be surprised to see ACT coming up with a policy giving out money. They normally stand on your own two feet and haul yourselves up by your bootstraps, but he argued the benefits would be realised. It's not a handout; it's an investment in young Kiwis to grow their own wealth. I really like it as an idea, and I'm not the only one. Neil Edmond is the CEO and co-founder of MoneyTime, a financial literacy programme for schools, and he was really positive about Seymour's idea when he spoke on the Mike Hosking Breakfast. 

“The Ministry of Education has done a great thing by making financial literacy mandatory in schools from next year, and so students from Years 1 to 10 are going to be learning the basics of personal finance and the basics of investing. But then the next logical step is to give them hands-on real life experience, and I think just even with $500 you can learn an awful lot just by having that practical hands-on experience.  

“There's a lot of that sort of entrepreneurial type experience where they have the bake stalls and the school fairs and they sell products and things like that. That's a business focused type activity, which is fantastic and it's really good that they do that. But what Seymour's suggesting or proposing is giving them experience around investing, which is a different type of creating wealth. And I think so many kids don't get that sort of opportunity, certainly not early on, and the earlier they start investing, obviously the better off they're going to be later on.” 

Well, yes. I think that's quite right. I mean, there are, it's not a completely unheard of idea for schools to do these kinds of programmes. There are schools before who've used their own initiative and kids have invested in share markets either with real money or with pretend money. They each have a share portfolio once they get to the senior level at school and follow the progress of the shares they've chosen throughout the year. And as Neil referred to, they set up businesses and involve themselves in marketing and that sort of thing as well. So it's not a completely off the wall idea. At the moment it is just that, it is not ACT policy yet. It was David Seymour saying, what do you think? We can make it policy, we'll listen to feedback, we'll see what you think.  

For those who are thinking, well, I'm on the bones of my bum trying to eke out daily meals from a loaf of bread and a can of baked beans, what's this bloody nonsense about giving kids $500? Well, maybe this sort of education would prevent that kind of poverty in the future. If we learnt how to manage what money comes in and learnt how to invest it properly, if we learnt how to save and make the money work for us, if you do have money left over, it's going to do more, according to those who know, for the country's financial maturity than any other scheme if all New Zealanders understood how money worked.  

There are a lot of people, I mean, I was the daughter of a bank manager, and I would call myself a financial illiterate. I'm a complete moron when it comes to money. Absolutely hopeless. I kind of, you know, pay my bills and I understand how that works. You pay your bills or you go to jail, and that's kind of basic. And I understand about capital, I've invested in KiwiSaver and I haven't got into debt and run up, so I mean, I'd probably give myself just a pass mark, but when it comes to creating wealth, no. Wouldn't have a clue. Pay my bills, save for my retirement in KiwiSaver, and that's about it. It'd be great to be able to hone the skills of those who already have innate talent as entrepreneurs and to give other people the kind of basics they need to understand how to make the most with what they've got. I'd really love to get your thoughts on this, as indeed would David Seymour.