A supermarket cashier overpays a shopper mom $10 in change. On realising it, the mother promptly returns the excess, knowing the cashier would have to pay for her shortfall from her own purse. Her 7-year-old observes the casual exchange and learns — not just about the virtues of honesty but also that people are worth more than money.
Family money values are not printed on a prominently hung poster at home. Instead, they are imprinted in the minds and hearts of our children in a way that can shape their financial and life decisions well into their adulthood.
Are experiences more important than things? Is quantity prized over quality? Is it okay not to return money borrowed because it’s just a small sum? What are your family’s money values?
While every child will grow up to have their own money values, much of their financial management prowess in the future will be shaped by lessons learned, intentionally or otherwise, in their formative years.
“SIX in 10 Singapore millennials are finding it more challenging to manage their money since the start of the Covid-19 outbreak, according to a study by Standard Chartered Bank. Only 18 per cent feel in control of their personal finances.” – Business Times1
In an ideal world, money is not a prerequisite for happiness. However, money gets people what they need and helps them build the life they want. It can provide a person or a family with choices, comfort and control even in uncertain times. Children need to know that it is not about how much money or things one has or owns. The key is to understand how to manage what we have well.
Share with your children the story of where their money comes from so they appreciate its origins and the hard work it takes to earn it. Share your work and life demands in your everyday environment, the sacrifices and challenges you face. This will make the children’s weekly allowances more meaningful and nurture other values such as appreciation and filial piety.
Spending money is so easy these days. Just tap or click. It’s going to get easier with more cashless transaction channels. So the ability to create a budget and stick to it has never been more important. Budget not just money but also time, our most valuable resource.
In teaching your child about budgeting, you teach them how to live within their means and why is it always worthwhile to save up for the future.
In teaching them to save, you teach discipline and consistency – values that I have been taught since young and that drive the desire and fighting spirit in me. Show the children that by saving up even just a dollar a day, they can accumulate to $365 a year. Let them buy a year-end gift for themselves. From there, go bigger. How about save daily for 20 years? Imagine the conversations and learning adventures that will spark in the whole family.
The young ones speak “digital” as their first language. As a parent, pick up on the new tools out there to optimise managing money.
Banking apps and speciality personal finance apps such as Monny, Planner Bee and Wallet are designed with features to help you manage spending as a family. Learn as your child learns.
Linked to picking up new online tools is the need to be aware of personal cyber security. With the rise of cybercrimes in Singapore, it is critical to educate your child on using strong passwords, keeping information private and protecting their identity.
As debit and credit cards make our life easier with faster and simpler money transactions, it is easy to lose track of our money when all we have to do is tap to pay. Explain to your child that debit cards deduct payment directly from their synced bank account without deferred and accumulated payment. On the other hand, credit cards let you enjoy “free money” now at a cost. High-interest rates can easily cause late payment to snowball into a crushing debt.
Once the children grow into their late teens, they will begin to make more decisions and be exposed to more exciting possibilities with money. With a foundation of strong family values, your youth will be ready for techniques to save and grow his money. He has a long runway and a clean slate. Techniques such as Financial Needs Analysis and financial vision boards can help them get started on personal financial plans early as they learn to manage common pitfalls and gaps.
Money is an inevitable part of life, and financial literacy skills will be valuable as the child grows in the path of their choosing. One can provide tools and techniques, but I believe that sound money habits begin at home. So invest time in your child over money talk and let their curiosity guide you. You may be surprised how all your conversations will turn into a wealth of learning for the whole family.
1Source:Business Times, https://www.businesstimes.com.sg/banking-finance/most-singapore-millennials-find-managing-money-difficult-since-start-of-covid-19
