Money savvy is not something schools will teach your child, so it’s on parents to kickstart that curiosity and financial know-how. While money can be a tricky topic to broach, the “let’s not talk about it” approach is a disservice to your child. He/she will go through life without building financial knowledge through less intimidating scenarios like earning pocket money or understanding that bills need to be paid monthly. Here are a few easy ways to get started on teaching your kids some core, essential financial lessons, and who knows, you might learn something yourself too!
Whether it’s splurging their red packet money on a toy they have had their sights on or spending their weekly allowance on stickers, teaching kids to save a portion of whatever they earn/receive is a good habit to instill. It helps to create a savings mindset, shows them the power of compound interest and the practice of setting money goals for big ticket items. Above all, it teaches discipline and delayed gratification, both life traits that can apply to all other areas of their life!
Instilling a child with a strong sense of confidence not to compare with others is a lifelong journey. It starts with teaching them to think for themselves and not to blindly follow what YouTube ads market to them. For instance, if designer school bags and sneakers are common within their school cohort, explain that this is not an automatic right and how chasing down overpriced designer goods for bragging rights is a fast track to poor financial habits.
Teaching a child to be mindful about money starts as early as they’re able to sit up. Use everyday activities like trips to the supermarket to help them understand the difference between a need (fresh meat, vegetables) vs. a want (sweets, carbonated drinks). Start an account with Milestone and show them how to set aside money for essential big purchases like a laptop, and when it’s time, let me them pull the trigger on the transaction to fully experience what it’s like to save for something they really want. Today it’s a Playstation game, tomorrow it could be their first car or HDB flat.
Discussing personal finance doesn’t have to be boring. By interjecting it into everyday life you make the topic less intimidating and easier for children to ask any burning questions they might have. Set aside time to play board games like Monopoly, or to learn about a personal finance topic together. Show them how to transfer money, read a sales receipt, balance a checkbook, or decipher the fine print of credit card agreements. All these “small” exercises contribute to their financial savviness and show them good habits like paying the credit card bill in full reinforcing what they will do when they’re older.
Taxes are not going anywhere, so it is important for children to understand it’s a big part of adulthood. Help them understand the general concept of taxes (personal, GST, property), what it pays for (roads, public infrastructure like playgrounds) , what percentage they should expect to set aside, and how it can affect daily spending. If your child is older, start introducing them to the CPF system and use it as an example to show how compound interest can help build a little nest egg from the time they earn their first dollar.
“No one has ever become poor from giving.” – Anne Frank
Helping your child nurture a more giving nature from young is a life skill that will benefit them greatly. By sharing with others what they have, they not only grow as a person but develop an understanding about the value of money and the positive impact it can have. Milestone’s GIVE feature makes charitable contributions a seamless addition to their financial ecosystem, and hopefully an essential part of their life as they grow.