Debt-Free at 18: The Money Systems We Put in Place Years Before University
18 Jan, 2026
Well folks. Eighteen years ago, we brought our tiny baby (just 2kg) home from the hospital. In mid-February, she is leaving home, off to study Psychology and Law at Otago University. I’m so looking forward to her finding her next steps, but I will miss her terribly. However, to lessen my sense of loss, I do point out that I’ve got a lot of spare time and can visit her any time I choose! Not on her watch, she reckons. She is ready to go! And, I’m not going to lie, I am looking forward to a tidier house.
As Jonny and I adjust to a new phase of long-distance parenting, ‘let her get on with it herself’, parenting, I’m pretty determined to make one last push to get her financially ready for the big, wide world as much as we can. And anyone who has read The Happy Saver for a while knows I’ve always put a lot of time into making sure she understands how money works, long before she leaves home. In many ways, it all comes down to this moment: can she leave home and be fully financially capable? Without a doubt, I’m pleased to say the answer is yes.
I’ve been receiving a lot of questions over the last few months about teaching a younger generation about money, whether they are leaving home to head into work or study, so today I’m sharing exactly how we have managed to, I hope, successfully let her financially set sail from home.
Before I go any further, just keep in mind that this is our situation. Some of what you’ll read below is about habits, systems, and mindset, all transferable things that anyone can use. Some of it is about resources and parental support, which I fully acknowledge that not everyone has access to. I hope that you take what’s useful, leave what’s not, and maybe start a few good conversations in your own whānau. The key for us has been that we have taken the time over the 18 years she has lived at home to build a strong financial position and impart some helpful information to her. Hundreds of tiny conversations about money build lasting habits. Investing in the sharemarket from a young age makes money.
Throughout her school career, she has managed small amounts of money with a small income from a part-time job. Her expenses have been small, paying for the extras she wanted. The Bank of Mum and Dad have willingly picked up the rest of her costs (schooling, clothing, holidays) because that’s what we as parents do. However, in 2026, for the first time in her life, she is facing far higher financial costs head-on. We estimate they will be about $35,000. She will be getting sent big bills, with her name on them. Living away from home ain’t cheap. Studying at university ain’t cheap. Moving away from a small town with fewer shops to tempt you might not be cheap either. A big change is imminent for her, and if she manages her money well, she will feel more confident.
Jonny and I saw this coming years ago, so we have been systematically, through hundreds of small conversations and some very deliberate actions, preparing her for it. This was never a last‑minute crash course in money at 18. It’s been gradual, sometimes uncomfortable, definitely not perfect, but successful enough.
Step 1. A part of all you earn is yours to keep… and invest
From her very first $1 earned, we MADE her invest 50c into the sharemarket, including (despite the giver often protesting) gifted money. The goal was to create a habit and a mindset that you must always invest a portion of your income for future growth. No exceptions. A child who spends their entire income often becomes an adult living paycheque to paycheque. And you know what, she soon learned that she had plenty of money left over after investing.
Did she always love this rule? Absolutely not. There were moments she wanted to spend everything, moments she questioned why she couldn’t “just this once”. But over time, it became normal. As a result, she now has ~$60,000 invested in her KiwiSaver and a Smart Total World ETF (using Sharesies). And most importantly, she sees that the money she invested now grows all on its own, creating more money. Just to be clear, we also invested a very small weekly amount on her behalf. Together, it all compounded and grew.
Step 2. We have always talked about money
We have always shared with her what we spend as a whānau, and what Jonny and I earn. This transparency helped her build a realistic mental picture of what life actually costs. It also meant that when she asked for things, those conversations were grounded in reality rather than wishful thinking.
This openness hasn’t removed all tension - we all get frustrated sometimes when we just can’t afford something we want right now - but it has made money something we talk about, not something hidden, confusing or shameful. Debt, in our house, has always been framed as a last resort, never a first. This openness has made it easier to discuss how to cover the huge university costs coming her way, prompted her to work harder and earn more money, and encouraged her to apply for scholarships to offset the costs.
Step 3. She already knows how to budget
I set her up with PocketSmith about 18 months ago because I correctly figured that if she could manage her income and expenses when she earned and spent very little, she would have a good base to scale up.
I gave her a quick lesson and left her to it. Kids learn new software easily, but she didn’t get it right immediately, and she asks for my help from time to time. I very much step in to help, then step back and stay out of her way. Anyone who has engaged with teens understands 😉. There were missed categories and a few “how did I spend that much on food?” moments. But that was precisely the point. She learned while the stakes were low. Did she love ‘having’ to budget? No, but in her quiet way, she absolutely sees the benefits of doing so and often surprises me with insights she has about her money now, purely because she is using PocketSmith.
As soon as she leaves home, she will take over payment for most of her expenses, including accommodation and fees, as well as everyday spending. She will feel every dollar coming and going from her life, have that information auto-imported into PocketSmith, and will use that data to budget ahead.
Step 4. She has complete control of her investments
When she turned 18 last year, I transferred her Sharesies investments into her name so she now manages all buying (and selling) as she sees fit, or with my guidance if she asks for it. She has spent years moving money from her bank account into Sharesies and then investing it, with me watching on/helping out. She only buys the Smart Total World Fund (TWF). Did she immediately sell it and blow the lot - something parents fear. NO, because she understood what went into creating it.
Although Sharesies is a much more expensive platform to use, this has been a brilliant education in how invested money grows over time. Still, it was important for her to take control so she could feel the full weight of investing a portion of every paycheque without me having to remind her. Crucially, she is about to understand in real time how to use her invested money, which brings me to an important point.
Yes, she is selling a small portion of her total investments to help fund her first year. That was a deliberate decision. We weighed up the opportunity cost of leaving every dollar invested versus the very real benefit of selling it all. For us, selling 5% of her total investments as a short‑term bridge into adulthood felt like a reasonable trade‑off, not a failure as a long-term investor. We anticipate her applying her version of the 4% Rule annually and, most likely, still finishing university with more invested than she started with, because she will continue to invest a portion of any dollar earned.
Ready to launch
Now, as she gets ready to step out on her own, she has 100% control over her finances with:
A banking structure she understands because she set up the accounts
Income, she knows how to manage: invest, save, spend
KiwiSaver in a low fee fund (InvestNow Foundation Series Total World Fund) is meant for retirement (not a first home)
Sharesies Smart Total World Fund ETF (TWF) investments are working for her
A very clear idea of her 2026 expenses
As parents, our role has shifted. I’m now tech support, a financial advisor (‘Mumvisor’), and an occasional ‘employer’ who pays her wages as needed. In this blog, I wanted to dig into the banking structure we’ve helped her build as she enters this next life phase. She banks with a New Zealand bank and pays no account fees.
Scaling up the complexity of her banking system
With a lump-sum payment due to her Hall of Residence, plus $290 weekly accommodation payments, around $10,000 in course costs, and additional funds needed for textbooks and socialising, she has opened multiple bank accounts to manage it all. Each payment she needs to make will come from her own accounts because ownership is the lesson.
Bank Accounts
Cheque Account (debit card only): An everyday account for bills and daily life
Spending Money Account: She will sell 5% of her ~$60,000 investments ($3,000). Spread over 46 weeks, this gives her $65 per week to last the year. She will auto-transfer $65 a week into her Cheque Account
Emergency Fund Savings: $500 for genuine emergencies
Course Costs Savings: A Sinking Fund for tuition. Her $2,500 scholarship will go here. She continues to work long hours and save right up until she leaves for uni in mid February, and we will then cover any shortfall
Hall of Residence Savings: $11,000 upfront payment due shortly. She saved $6,000, and a $5,000 scholarship covers the remaining portion of the upfront payment. Then, 36 x $290 weekly accommodation payments are set aside, with any shortfall to be provided by Jonny and I. Each week, she will auto-transfer $290 to her Cheque Account to make this payment
A few points to make
We do expect her to get a job during the year and work during holidays, but we’re giving her a month or two to settle into a new city and new routine first.
Credit card = debt. She doesn’t need one, plus the points offered are rubbish. Her Debit card will suffice.
Student overdraft? Absolutely not. It’s an enticement into debt. Her $500 cash emergency fund (which earns interest) will do the trick.
We expect her to continue applying for scholarships.
She doesn’t qualify for a student allowance as our household income is just above the threshold.
We will continue to cover her phone and health insurance because they are intertwined with ours. And while she will pay for some fuel, we will cover her car‑related costs such as WOF and servicing. She found a free one-year sign-up for roadside assistance through AMI.
For now, her 50% investment rate is on hold. Her outgoings are simply too high. Instead, she now invests 20%, spends 30%, and saves 50% toward university costs. I’ve stressed the importance of continually investing at least 20%, even when life is expensive.
Collaboration with our child has been key
Getting her through university debt‑free is a collaborative effort between the three of us. She is pulling her weight, has worked part-time during the year and full-time over the summer, and has treated both her and our money with respect. Because she is making a strong effort - and because Jonny and I are financially independent - we can afford to cover the shortfall. We’ll continue to do so until her education is complete.
As I write all this down, I’m feeling pretty confident that she is good to go. Gold star to me! But, most importantly, SHE is feeling confident too.
Worth noting, because it doesn’t come across here, is that you might think I’ve got the perfect child, keen to engage and learn all she can about money. She has never ever been excited to talk about money, learn to invest, or hustle for income. Yes, I wish I were blessed with that child, but alas, haha, NO! But I think it has been the best thing for me, because I knew I had to help her learn and understand anyway. After all, money is such an integral part of everyday life, and she has had to learn about it regardless. And to me, that is the real win for us as parents. We’ve taught her a life skill - despite her not being keen to learn it!
And in moments of teenage generosity, I know she is grateful to be in the financial position she is in, with the knowledge she has. If we hadn’t persisted, she would be heading straight into student debt at age 18 without understanding its future implications.
I hope this helps you think about the young people in your life and what small steps you might take, long before university is even on the horizon, to help them feel financially confident.
But, before I go, just one last thing.
The Elephant in the Room: Why not just take out a student loan?
This is a question I’m often asked. Below is a recent email I sent in reply.
Subject: Why I’m cautious about student loans, even when they’re interest-free
Kia ora,
Thanks for your question. It’s a fair one. I’m not anti‑education, and I’m not saying no young person should ever take out a student loan. What I am cautious about is how casually we encourage debt simply because it’s labelled “interest-free”. With a daughter about to go to university, how she will pay for it is very top of mind.
Firstly, an interest‑free loan is still a loan. It is debt. It is money you now owe someone else. It reduces your take‑home pay because you have to make payments on your debt once you earn over $24,000 a year. For many people, that 12% repayment quietly takes a bite out of their paycheque for years, often decades. Life is rarely neat or linear, and many well‑meaning people advise borrowers not to prioritise repayment. This trips people up later, particularly women.
Women are more likely to take time out of the workforce, work part-time, be underemployed, or partner with someone who also has student loan debt. When that happens, loans linger, which affects borrowing power, cash flow, early investing, family choices (such as having children), and freedom.
Secondly, student loans are interest-free only if you stay living and working in New Zealand. If you move overseas, interest applies (currently around 4.9%). I’ve seen plenty of people return home to balances far larger than expected. And I hear from people who can’t/won’t return home because of their ballooning debt.
Thirdly, government policy settings are not guaranteed to remain in place forever. Planning your life on the assumption that nothing will ever change - and that student debt will remain interest-free - is a risk I’m not comfortable with.
We’ve normalised debt too much. We tell 18‑year‑olds not to worry about it, without discussing the long‑term trade‑offs.
In our family, we’re choosing to pay for university with cash because we can, and because she is contributing significantly. And when she exits her study, she never has to give the cost of her education a second thought. We want her looking forward, not backwards.
If you can avoid debt, you buy yourself freedom: freedom of choice, flexibility, and headspace. That’s what I’m always advocating for.
Ngā mihi,
