Kick starting my child's financial journey
Ages 3 to 8 are important for learning and development. Children in this age-range consume information like a vacuum cleaner, relentless and non-discriminatory. Hence, we need to be more mindful and more intentional with our young ones. The path is theirs alone…all we do is to provide signages…both good and bad.
Learning to manage one’s finances is a virtue and a skill that interlaces with all facets of life. As a parent of a 7- and 4-year-old, I am constantly trying to guide my boys towards developing a healthy view of money and its uses.
This Lunar New Year is a perfect opportunity to jumpstart this lifelong journey. However, the method must be age appropriate (for them) and sustainable (for us).
Monies received on behalf of my 4-year-old will be put in an envelope, along with his previous collections. At an older age, we will be opening a joint savings account…which is what we plan to happen for 7-year-old, Oliver.
We plan to open Oliver’s first joint savings account with this year’s red packet collection. Before that, I’ll make sure he physically counts the cash, and we’ll have a chat about how much the collection is worth.
The idea is for him to start seeing money as an ability to purchase and hence should be judicious, keeping in mind the immediate benefits, opportunity costs and storing of that purchasing power. This is not a one-time thing and needs to be reinforced (nagged😊) throughout his life when apt.
When ready, I envision Oliver coming to the bank with me to open the account. It should be an interesting experience as it will be his first time at a bank and there will be plenty of questions. It’d be good for some father-son bonding.
Somewhere down the line, I’ll introduce him to the bank statements so he will be able to see how money is growing from the decision to save (deposits) and the bank’s reward (interest) for saving.
My opinion is that the concept of interest is an important gateway for managing finances. Continually developing an age-appropriate understanding is crucial.
I understand that the above looks like a great and do-able plan, but we adults get ahead of ourselves, and we need to manage our expectations on executing and adjusting as we follow through on the plan.
More importantly, at the end of the day, it is more vital (and probably more difficult) as parents to simply set a good example as good stewards of not just money but also how to be a kind and respectful person all around. While Lunar New Year brings money into focus, as parents, we must not lose sight of the human values which are fundamentally more important.
To conclude, I leave you three areas to consider this Lunar New Year Season;
#1 Help your child develop understanding the value of monies collected – What can the total sum buy? Brainstorm a few things and let the conversation flow.
#2 Instant gratification Vs. Delayed spending – Don’t be afraid share your experiences. Kids love a good story.
#3 Be mindful of your behaviour – Like it or not, you are your child’s hero and role-model.
Happy Lunar New Year and may the year of the Water Rabbit bring good health and prosperity to yourself, your family and friends.
(P.S - More on how we manage Oliver’s daily pocket money in the next post).
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