Asked by Anonymous
Asked on 30 Oct 2018
I am 35 this year, I have two young ones. Aged 5 and 3. Younger one in pre-school and the older one is going to primary school next year. I was thinking how to inculcate a good habit in them when it comes to teaching them about how valuable money is for themselves and how it is not easy to earn. So they don't have the idea that money drops from the sky. I'm asking now because I hope that the older one can be a role model for the younger one when he goes to school also. Interested to hear from other parents or people who have been taught good lessons by your own parents? Thank you to the community people!
I think the best way is to talk to your children about the family finance.
If you have been doing budgeting for say, groceries and bills, let the kids know this is what is available for those expenses. Bring them along when you need to make marketing trips. Give them a sense of the utilities bills you’re paying and how they can help reduce those numbers (eg turning off lights when not in use, use less water, aircon, etc).
Give them a savings account. Under no circumstances should you take money from them, unless in the most dire of situations.
By having their own savings account, they can see the fruit of their savings. Like Elsa suggested, can make them work, though I would suggest a slight tweak to it. If they wanna buy toys, ask them to do work, such as cleaning their rooms, for say a week before buying them the toys. That way, they would also know the value of time and money, and hopefully, see through fads and hypes.
Btw, I’m not married nor do I have kids. So all these are wha I heard from people, not personal experience hor.
My parents do not know much about money & honestly I probably grew up with the wrong values as well. Don't have a kid but a nephew and honestly nephew is very much pampered by the parents who buy what he wants. Whenever we walk into a toy shop; he ask for a toy. I would tell him "look, I only have this $10, we can spend it on an experience/activity or just a toy you will toss away." it didn't mean much to him at first; but one day we walked into a toy store and he desperately searches for a toy he wants so badly + under $10 and he couldn't find one... and we walked out buying nothing that he realizes he doesn't really NEED one.
Of course, I would explain to him how the $10 can compound to something bigger.. but thats for another story. Now, he also gets joy out of putting coins into my piggy bank so getting them to enjoy the process is important too.
I don't believe in doing household chores for $$; those are things YOU SHOULD DO. I do believe in getting rewards for them when they behaved exceptionally well.. like in the case of nephew being exceptionally nice + patient to a kid who was super rude to him. I simply acknowledge his actions and said that you were very nice by being xxx to said kid. I think you deserve to you know, share this ice cream with me...
Do not tag $ to good deeds done/good behaviors... reward them but don't say things like oh, you did blah blah blah today so here's $5 for you. Next time you do better and you will get $10 etc. Good things and behaviors should always be what they SHOULD do. We can reward them to link that good deed = possible rewards; but never to only do good things for rewards.
"And when your child asks you for money, you may want to say, "Write me a list of ten different things that you can do, legally and morally, so that you can affordwhat you want without asking me for the money" - Robert Kiyosaki, Rich Kid Smart Kid, pg 55.
Tons of gems when you deep dive financial literacy for children. Borrow the books from the library.
I recommend using the following materials:
Here's an idea. Inculcate a savings habit from young. Give them more allowance than they need but tell them that 20% of it must be stashed in their piggy bank with a record of how much was being "deposited" in everytime. Tell them that if they wanted to spend on something they can only spend what's inside the piggy bank, but only a maximum of 10% of their accumulated funds each month. For anything extra they will have to do work around the house and you'll increase their allowance by x% for each KPI done.
It's important to give them more than they need for recesses otherwise they'll starve after saving the 20% (especially if they're lazy and don't want to do any work) so please bear that in mind 😂
This method is so that even if they're lazy to work for more, they'll at least have the saving habit. And when they want to spend on something they'll realise how difficult is it to buy something when you don't work for additional allowance each month. 👍
Are you willing to force them to make your own meals or starve concept?
If yes, give them a weeks allowance to manage.
Note that giving assets without proper guidnace is silly as well. Ie: you have to educate them on the finance part.
If you cannot self discipline yourself on the first point. Do that first. Before you can discipline others, discipline yourself.
I don't have kids yet, but I have always thought that I will make my future kids work for money. I.e. do chores for some extra money, to let them understand that money has to be worked for. What do you think? Would that be feasible?
Give them actual coins and notes. Easier to conceptualise than numbers on a screen. Give them an amount that is just slightly more tham needed for their daily expenses. At the same time, give them an actual physical piggy bank that they can clink their excess coins into. Teaches concept of saving.
Give them chores to do around the house for money. Actually this one im not so sure but i heard western parents like to do this.
1) Let them have their own piggy bank :)
2) Ask them daily questions related to money - when taking them out to a place, get them to remember the bus fare to and fro. I think it helps them be mindful about the small things. :)
3) Talk to them about your own lessons about finances to help them learn simple concepts. (Comparing prices of a product in one store as compared to another is a good start!)
Once a year, give your children a big angpow (for example, $100 during CNY or whichever festival applicable to you). Tell them this $100 will be the money for them to buy whatever they want for the whole year. If they finish it, they will not get anymore until the following year.
But you don't have to hand them the money. Just let them know if there is something they want, they just let you know and you will take it out of their $100. Each time they want something, let them know it will come out of their $100 and ask if they really want it. If they do, buy it for them and let them know how much of their $100 remains (for example, keep track on a paper in simple understandable manner and stick it on the fridge).
If they use it up too fast, they will gradually learn not to just buy everything they want. That way, they can gradually learn the concept of budgeting and controlling their expenses with real-life experience. It is fine if they use up their $100 within a few months in the first year as they have years to pick up the habit.
I believe this works particularly well with siblings because if one of them (for example, the younger child when he starts receiving his $100) uses up their fund early in the year and see other siblings still have funds to use, they would see how the other siblings are budgeting their money and learn from there.
I'm not married nor do I have kids, but among all the methods I've heard so far, this is my favourite and I intend to apply them when I have children of my own. It is of course important for the parent to not give in to the child when they whine after using up all their funds for the year.
Equip them with financial knowledge such as savings, investment, budgeting etc. Expose them to the different investment tools (equities, bonds, property, currencies etc) when they are older so that they know the risks and benefits involved.