The Daughter has been four years in the workforce. After her second year, her salary doubled. Yet, she spends no more than $2,000 a month, half of which she gives to me. She does not own branded handbags, shoes, or clothes. She does not intend to. Instead, she focuses on buying wealth generating assets like shares.


We all know that retail therapy makes people happy. Buying things literally gives many people a rush of happiness. This association was formed from the first day we had our own money to spend as we wish. However as we all know, this rush can be harmful if it is pursued without any thought for the consequences. So how do you bring up kids to have financial prudence?

Financial Prudence, from the Beginning

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For a psychologist like me, teaching financial prudence is all about helping my children’s brains make the correct associations.

Through their childhood, I helped The Daughter…

  • Connect happiness with accumulating money, not spending it.
  • Connect happiness with making money, not spending it.

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Step 1: Discretionary Pocket Money

In Primary 1, I gave her pocket money to spend as she wished. It was only $1 a day so I allowed her to spend it as she wished. Oh my! What happiness that gave her! For the first time, she experienced the heady joy of being able to do what she wanted with what she had. The sheer freedom to make her own decisions gave her happiness.

Predictably, she bought all sorts of things. The school bookshop really knew how to stock inventory. There were all manner of colourful erasers, pencils, cards, tissue paper etc… The Daughter did not stinge. She bought as much as she could, because every time she acquired some new bric-a-brac, it gave her joy momentarily. I allowed it.

Step 2: Creating a Teachable Moment

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By Primary 2, she had accumulated a mountain of odds and ends. During spring cleaning, I gathered this into a pile and asked her two questions gently and curiously.

  • How much money did you spend on this pile?
  • Does it give you pleasure now?

Looking at the messy pile with disgust, The Daughter replied that all of her money last year went into that pile of stuff, and that it is now a pile of junk. Then, I asked one more question.

  • What else can you do with that money, if you still had it?

So, we went around looking for stuff that she could buy with $365. These were again, consumables: toys, bags, and stationery which were more expensive. Yet, she was very excited and she said that she should have saved up to buy these more expensive consumables.

My next questions were…

  • Suppose you buy all these things and make another pile. In 10 years time, would that pile of things give you pleasure?
  • What can you buy that will keep on giving you pleasure month after month after month?

The Daughter, still experiencing the disgust she felt at the messy pile on her bedroom floor, answered that the new pile would still be a disgusting pile of junk in 10 years time. However, she did not know the answer to the second question.

So, I answered it for her. I explained that if Mommy were to collect a mountain of handbags and make-up, those handbags and make-up would one day be a mountain of trash.

Instead, I preferred to accumulate the money to buy an apartment to rent out, or company shares that would give me dividend payouts. The rental money that enters my bank account every month would then give me pleasure for a long time to come.

Image: Timothy Buck on Unsplash

Similarly, she could accumulate her pocket money to buy a vending machine. Every week, she would be able to take new money from her vending machine to add to her pile of money. Does that make her as happy as when I give her $1 a day?

She thought for a while and said, “I think I would be able to get more than $1 a day. That would make me happier than when you give me just $1 a day.”

In that single afternoon, I helped her associate:

  • the purchase of consumables with the feeling of disgust
  • the purchase of wealth generation assets with the feeling of happiness
  • the thought of accumulating funds with the feeling of happiness.

Step 3: Give Pleasure

The next day, I went with her to open a bank account. I showed her the minimum sum I had put in there. Then, we banked in her savings every month. Each time we made a trip to the bank, I praised her and hugged her. I made it a happy occasion. This gave her a lot of pleasure. In this way, I infused the act of accumulating wealth with joy.

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Step 4: Facilitate Earnings

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I helped her set up small businesses and banked her profits into her account. She was thrilled to see her money grow. She once made a whopping USD$1,500 on a business called GiftAChineseName where she translated American names into Chinese and rendered them into Chinese calligraphy, using our home inkjet printer.

I made her give away half that amount to our church. The church office praised her and made much of her generosity. Thus, she experienced the happiness of giving money away to those in need.

No matter the financial prudence, it is important to have the earning power also, in order to achieve financial security.

Rewiring the Happiness Circuits of the Brain

We are all drawn to repeat activities that give us joy. So, as a psychologist, I taught my children financial prudence by consciously wiring their brains to feel joy when they see their money grow, and to feel disgust at spending on what will one day, become junk.

As a result, both The Daughter and The Son spend very little. Instead, they spend a lot more time trying to see how they can make money, or use money to make money.

The Power of EQ

I started this article with an account of The Daughter earning twice her starting pay after her second year in the workforce. The Daughter’s career took off because she had strong people skills.

That is the power of EQ at work. Parents who focus entirely on academic excellence, thinking it will lead their child to financial success, have lost the plot. In life, it is EQ that offers financial security. Come check out testimonials on our EQ classes at https://www.collab-corner.com

Header and featured images: Fabian Blank on Unsplash

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