kids and money

Chances are, your parents told you that “money doesn’t grow on trees” and when you grew up, you heard that “money makes the world go round”. There’s truth in both.

If you are a typical Singaporean, you probably take a practical view towards money, recognising that in modern society, money does play a part in helping us to achieve our dreams and goals, and grow more wealth.

In our society, cash is still king and one can tap on opportunities when one has cash. At the same time, you are probably also rather conservative and careful with money, and aware of the importance of savings and spending within the limits.


With the right guidance, your child can develop a savvy money sense. But don’t wait till it’s too late. Good money behaviour should be taught to a child as early as possible, says Ms Chng Bee Leng, Head of Mass Segment, OCBC Bank. As soon as Junior opens his mouth to say “I want!” while pointing to that Transformers toy, you can start discussing about “needs” and “wants” to him.

“Money management is a critical life skill for everyone. The sooner such lessons are imparted, the easier it is for parents to inculcate the right values and attitudes about money that will help the child to acquire the skills towards good money management and eventually, steps towards financial planning. A child needs to learn the value of money and the responsibility and discipline that comes with having and using it,” Ms Chng shares.

The concepts may flow right over his head in the beginning, but keep going and he’ll soon start to catch on. For younger children, some banks have savings programs to help parent teach the child about savings. For older children, board games like Monopoly and other online games can help.

You can also turn a simple household chore to a money education opportunity, says Ms Chng. For example, tag a suitable chore with a monetary value: your child earns $0.50 if he takes his plate to the kitchen sink after each meal, $1 for cleaning up the playroom, and so on. “In this way, the child earns the money, and is more likely to appreciate it and not spend it carelessly on unnecessary items, as it may have taken one week of consistent plate clearing at dinner time to earn $3.50,” she adds.

Because money plays a part in almost every transaction we make in life, having financial literacy, the discipline, and the right attitude towards money will put your child in good stead in future. One thing to avoid: covering up the real value of things.

Many parents do not tell their children how much an item costs. They think that they are shielding their child from worrying unnecessarily about the family’s finances. However, being familiar with the family’s financial situation may encourage the child to be more responsible about spending habits, perhaps learning to save more and spend less on frivolous items, advises Ms Chng. On top of that, it would be best to explain the role of credit cards, credit limits and credit card bill payments adequately once your child is old enough to understand. If not, the child the idea that a credit card is a magic wand that they can wave to finance whatever they need, she warns.

How best can we teach our children about money? Ms Chng lists the ways:

1. Needs Vs Wants

Introduce the concepts and the difference between necessities (“needs”) and luxuries (“wants”). You can do it while shopping. For wxample, play a game of “needs” versus “wants” when the family is doing grocery shopping, and the child can
learn about the necessities and the good-to-haves.

2. Start Him Saving

Open a savings account for your child and start him on a savings program. For young children, you can use the “sticker and cards” method which some banks have. This will help your child to form a life-long habit of putting aside some money regularly for savings. As he sees his money grows in the account, he will be motivated to save further.

3. Encourage Goal Setting

Encourage a child to save towards a goal – a new toy that he has always wanted.

4. Teach Budgeting

When the child is older, you can introduce the concept of “budgeting”. For example, explain to him that household expenses are managed on a budget, which is allocated in order of priority for items like food, clothing and toys. When declining requests for toys, explain gently to the child why, if the toy budget for the month has been used, or if the requested toy exceeds the budgeted amount. This gives the child a sense of the value of money, and the child also learns to delay instant gratification.

5. Give Him An Allowance

When your child can manage it, give him an allowance to help him visualise how to manage money on a “budget”. Your child will have to decide how to allocate this limited amount of money for saving, spending and charity.

6. Compare, Compare, Compare

Encourage the child to compare prices when purchasing things. Encourage thrift, so that there is no unwarranted spending on highly priced items, when similar, cheaper alternatives are available.

7. Let Them Pay

Parents can also let them pay for the items that they pick for themselves. This way, they learn the various denominations of coins and currencies and experience handling money at the check-out counter.

8. Welcome Mistakes

Any discrepancies should always be an opportunity for the parent to teach the child about the various denominations of currencies, and how the child can manage their allowance if a certain item has cost more than the allowance amount.