15 July 2022

SOURCE: MoneySense

It probably comes as no surprise that you influence your kids significantly – from their taste in music, to their daily routines, to their values in life.

So it’s probably a good idea to know a thing or two about imparting sound financial values to them, from when they are as young as 3 years old (according to this study by behaviour experts from Cambridge University).

MoneySense has 3 simple tips you can incorporate into your everyday interaction with your children. 

Let the kids 'pay'

Pretend play is something many children enjoy. You might have seen them take care of a baby doll, whip up a storm in a toy kitchen, or play cashier.

Letting them try paying for stuff in real life may be something they associate with pretend play.

If they are still tiny tots, you get to show them how money works. They will see that if they like a toy or a snack, they need to give something to get it. You can also teach them how to count change. 

If they’re a little older, they will understand a deeper concept of spending. If the money had come from a piggy bank, for instance, they will understand that money that had been put away previously is gone forever with a purchase. 

For teenagers, you may want to task them with picking up groceries for the household. If you plan properly and give them a slightly tighter budget, it gives them practice with shopping for the best deal.

Importantly, the concept of making choices is ingrained in them. Rather than tell them “we can’t afford it” (which in some cases, at least, is a lie), make them see that “we choose not to spend money like that”. 

Allow them to make good and bad decisions

If they are to learn about making choices, what better way than to really let them experience it for real.

Something to consider: When your child goes to Primary 3 or so, consider giving pocket money weekly. That way, your child gets the freedom to shape their own spending and saving behaviour.

If there’s money left over at the end of the week, teach them to save. Use a transparent jar so they can see the savings grow – the visual impact of this cannot be underestimated. 

Better yet, train them to make saving the first thing to do as soon as they get their pocket money. Set out several jars – one for savings, one for spending, and one for charity.

It’s probably going to be hard to do, but don’t stop them from wasting money. And if your child uses up his pocket money early in the week, you need to hold back on your urges and let him miss a snack or two in school instead of giving him extra money.

Bailing your child out of a tough spot defeats the purpose of the exercise, and in fact, potentially has significant long-term implications. If they do not bear the consequences of bad financial decisions, they won’t appreciate the perks of making sound choices either. 

They won’t learn about working for something they want, which makes it less likely they’ll treasure what they have. 

And when they get into trouble, they may instinctively expect to be helped. You don’t want to set this tone for their financial future to spare your child a couple of hours of hunger.

Show them, don't tell them

If you’re always browsing online stores in your free time or splashing out on a new gadget the moment you lay your eyes on it, don’t be surprised if your child doesn’t pick up sound financial habits as quickly.

Yes, you’ve worked hard and may be able to afford all these comfortably. But your kid doesn’t know that you may have set aside your savings, and these purchases are coming out of your “spending” jar. 

They may see shopping as a right they are entitled to. They may chase the newest models or a new wardrobe all the time, instead of being contented. And they may get sucked into a competition trap on social media before you know it, if they see their friends using the newest laptop, or throwing an expensive birthday party.

By then, whatever advice you give your child will ring hollow. 

Remember, the young ’uns are always looking!

Learn more about other good financial habits on MoneySense, Singapore’s national financial education programme!

Article was first published on MoneySense on 12 Mar 2019.

Information accurate as of the date of publication.