SG Budget Babe
Asked on 23 Nov 2019
Not really the sharp end of financial markets or building a retirement nest egg - just the basics such as function/value of money, what banks do, what is credit.
Although I have no kids, but looking at my friends who are already parents, I see some of them already imparting financial management as young as 4, any earlier than that, you will probably want to focus on cause and effect type of teaching.
Once they come into contact with pocket money, it's always good to teach them that money is finite and that spending it now means they'll have to earn (or wait for you to give) more before they can spend again, then teach them how to set aside a small amount for delayed gratification.
When they have a firm grip, then venture into teaching them how to earn their keep. For example, they could do some small tasks in order to earn a little extra pocket money. That will teach them that money is not easy to earn. Then teach them the effect of saving all the extra pocket money instead of spending it.
I think what's important is to impress upon them that it's not how much they earn (or in their case, how much pocket money is given), but how much they can keep.
I got this advice quite early from some people who professionally manage money for quite well off people.
Start talking about financial sense - ASAP with your kids. And importantly, the advice was, try and have a schedule to talk to them regularily about this
I think starting at primary school will be good - or when they start having an allowance. Before that you can bring them to the bank to deposit their ang pow money and explain what a bank does. But in terms of savings, time value of money it would be good to wait till primary 1.
In terms of details on the financial markets I actually feel that it will also be good to expose them to it in mid primary school as well. My parents did that to me - by discussing relevant news and encouraging me to read the financial section of the straits times and business times. There are also some games available that do help to teach some useful concepts.
Start as young as possible. Building financial knowledge takes time and especially the topic of compounding requires a long aount of time as kids need to see how the money grows to understand it well
I feel it's around 3 to 4 yrs old since they have decision making capabilities. I've seen some documentary shows where the kids at age 3 to 4 are tasked to purchase stuff on their own. They have good grasp of what's the right thing to do, and mostly I think it's because we as parents are not as trusting or refuse to believe that they are capable. All the best!
When you start giving them pocket money, you can start teaching them on financial literacy. Even from primary 1, they can learn on the concept on delayed gratification. "If I don't buy extra snacks, I can save $0.50, which I can save up and buy a toy later."
You can also match the amount they save up and put into a piggy bank (as "interest" where you match dollar for dollar), where they can feel the piggy bank getting heavier, and allow them to choose to 'break' the bank during their birthday or Christmas where they can either reward themselves or "re-invest" for another season. :)
For value of money, it's probably giving them the choice to make their own (small) mistakes and then learning from that. Value of items vs satisfaction vs future returns. Also good to start teaching them on CPF when they are of secondary school age, as the value of compound interest is pretty good if they start then. :) I wish my parents had educated me more on CPF especially since I started working since O-levels and had to contribute to CPF through my salary.
Does sounds like as soon as they can reason or comprehend it be good time to start. Yet before that, good money or financial behaviours can be encouraged or inculcated, perhaps subconsciously.
For some example, not pandering to whims for instant gratification, working or earning for owns want/needs, and the joy of pocket money, patience and savings towards medium or long term goals, think and check before handing over the money, etc.
My dad, never taught me about banking (if i remember correctly). I doubt I would get it as a kid then. What I remember though, he bringing me to open a savings account, and depositing my ang pow money each year. That ingrained my savings habit, as I got a kick and fun out of it - seeing my savings grow over time.
Primary School ：Teach them the virtue of saving via the act of depositing money into piggy banks & put those savings into CPF/ investment on their behalf
Secondary School : Tell them to work part-time to earn their own keep/wants. Let them appreciate the manual hard work that goes behind getting active income
Pre-tertiary : Show them the compunding effect of their savings in the CPF/investment over the last 10-20 years. Contrast the passive income gained versus active income they got from part-time work. Then give them a fixed amount of seed money and open a brokerage account to embark their own investment journey
Start as young as possible and cultivate good financial habits. From the moment we need to give them pocket money, they need to be capable enough to know the value that they can exchange in return.
It is always about the value of money in exchange for the goods or services that fulfils the needs.
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