Ernest Tan, the author of Raising Financially Savvy Kids, believes that it is crucial for children to learn money management skills. In fact, says the father of three, money management is a vital life skill that children need to have in order to surf the waves of financial instability in today’s world.
There’s even an added benefit, the certified financial planner, who has over 18 years of experience in the industry says: “The same life skills used in good money management — planning, discipline, goal-setting and values — are the same needed for personal success. So when parents get education in money management and teach their children how to manage money using life skills, they will lead their children to success in their career and life.”
You can meet Ernest during his book sharing session at BookFest@Singapore 2014 on Wednesday, 17 December 2014, from 1.45pm to 2.45pm to learn more about equipping your kids with financial skills. But there’s no need to worry if you can’t make it. He shares some of his tips and tactics here.
Why it is important for children to be financially savvy?
Money controls almost everything in our lives, yet many do not have a good relationship with money or do not know the money rules. Financial literacy and management is a basic and essential skill for living. Money mastery is vital because it determines a person’s future.
With academic education but without financial education, children are able to be successful in their careers. But without financial education they may find themselves struggling financially. They work harder, but do not get ahead.
Money is also a powerful factor in family dynamics and relationships. h2 financial education will avoid tensions of complexity when parents deal with their children around the issue of money.
What roles do parents and teachers play in inculcating good financial practices?
Children’s mindsets about money are set at about the age of two years. They mimic their parents’ behavior, including money spending behavior, from that time.
Even though you may have not been actively teaching your kids about money, they have been watching you how you spend your money at the shopping mall, and will mimic what they see you do and say. This is why it is important to be mindful of your words, actions, and emotions around money in the presence of your kids. This will help your kids to inherit positive money habits and mindsets.
How can we parents teach our children about finances?
Make it fun. Teach them about saving, spending and sharing – when to save, spend or share, and how to allocate money wisely. By using the money jar system, you can show your child how to allocate the given allowance into different money jars with an understanding what the content of each jar’s purpose is. Help your kids to design and create their own money jars. They will be more likely to use their own money jars and follow through what I call “the money system” (in chapter three of my book) of saving.
When is a good time to start teaching my child about saving?
The earlier, the better. In fact, you should do it as soon as your child is receiving money from you or asking for money to buy things, as mindsets about money begin to form at about the age of two years. When children learn to master money at a young age, they will require less time and effort to unlearn the bad habitudes (habits and attitudes) about money, and will have more years in their life ahead to plan for a fulfilling and abundant life, without worrying about money.
Ernest Tan is the author of Raising Financially Savvy Kids, a step-by-step guide to for parents to help their children learn to spend, save, and share. The book also includes real-life approaches from parents, with activities and tips to put what other parents have learnt into daily practice. Meet Ernest at BookFest@Singapore 2014 on 17 December, from 1.45pm to 2.45pm (event schedule here) and learn more about equipping your kids with financial skills.