Money management is one of the most important life skills parents should pass on to their children. As the first gatekeeper to their financial knowledge, the choices that parents make can either end up inculcating good or bad money habits in their young ones.
Local author Ernest Tan, who wrote the book “Raising Financially Savvy Kids”, has taught many Singaporean parents and children about finance management in his workshops. He shares that parents are usually their kids’ first role models in financial management, and that children learn about money by observing the financial attitudes of their parents.
Many parents do not talk about money to their kids because they assume that the topic is too complex for children to grasp. They also do not want their kids to be burdened by financial constraints at such a young age. However, teaching kids about money is an inevitable process that involves the education of values and adopting new skills in managing cash.
Here are some ways to get started on imparting financial wisdom to junior:
TALK ABOUT MONEY
Have casual conversations about how you earn money. Tell the kids stories about people like Mark Zuckerberg and Jack Ma, and how they made their fortunes. Teach them about sales and discounts, and how to be discerning about what to spend money on. Should they buy it today, or wait till the storewide sale happening next week?
EXHIBIT GOOD MONEY BEHAVIOUR
Do you splurge in front of your kids? Or do you count every cent you have? Chances are, your child will pick up your spending habits from you. Remember: they watch your every move, including the way you treat your money.
SET GROUND RULES FOR ALLOWANCE
Start giving your child an allowance if you feel she is ready (you don’t have to wait till they enter school). Establish the practice of saving any surplus coins, or even putting away some money in the piggy bank before they start spending the allowance.
NECESSITY VS DESIRE
Help your child determine what their needs and wants are, using daily examples. Can a regular pen or pencil suffice, or does it have to be the one from Smiggle? Are two enough, or do you have to buy 10?
PLAY MONEY-THEMED GAMES
Games like the Game of Life or Monopoly stimulate real-life financial situations, and can introduce children to matters like having a job, buying properties, paying fines and taxes. Themed centres like KidZania provide an avenue for our kids to learn about financial realities (like working) while having fun!
INVOLVE THEM IN GROCERY SHOPPING
Take them with you to the supermarket. As you shop for your fruits and vegetables, you can talk about staying within budget. Also, get them to compare the prices of their favourite cereal or milk, instead of making a beeline for a specific brand.
OPEN A SAVINGS ACCOUNT
When your kids want to buy a big ticket item, talk to them about planning, saving and finding the best value for the coveted item. Open a savings account at one of the local banks for them, so they can do just that.
EXPLAIN HOW CREDIT CARDS OR ATMS WORK
Kids do not know where money comes from. To better give them a realistic understanding of wealth and money, talk to them about finance-related systems such as ATMs and credit cards so that they can appreciate how money works.
ALLOW THEM TO LEARN FROM BAD INVESTMENTS
Let your child make prudent money mistakes. These are vital learning points. For example, if they made a rash decision and bought the wrong toy, do not reimburse them. Allowing them to feel the financial pain now will help them be more careful with their future financial choices.
RAISE MONEY FOR CHARITY
If you find that your kids have too much, introduce the idea of fundraising for charity. For example, instead of birthday presents, your child could request for donations to a charity of her choice. Complete the learning process by bringing the donated cheque to the charity with her, so that they can better understand the fruits of compassion.
