Money Basics

Many young adults in our country today have been, or are at risk of, being declared bankrupt because of credit card debts. This situation is caused by their failure to observe basic financial management rules. According to a Bank Negara report released in 2010, 50% of credit card holders who had been declared bankrupt were under the age of 30.

This is the main reason why teaching kids about money and how to manage it should be taught early in life. You should teach them about the value of money, but more importantly, equip them with the skills and habits to let them manage their money wisely in the future.

Here are some simple ways you can incorporate these financial lessons into their lives.

1. Teach while playing

   Make it fun by playing games that help them learn about the value of money. Let your children grasp how to save and spend money through these games.

2. Take them on shopping trips

   Use your weekly grocery shopping trips as a learning experience. Based on your shopping list, tell them your budget and make it a game to meet that amount. Let your children track how much was spent, and analyse how you could have saved more when you get back.

3. Give them an allowance

   When your children are able to do household chores and help you around the house, you can start giving them an allowance for the chores they do. In this way, you will get them to do their chores while teaching them how to earn and manage their own money.

4. Encourage them to save

   Teach your children how to plan, portion and save their allowance for the day, week or month. Give them their own piggy bank to keep their money in. You can also use two money boxes – one for saving and one for spending, and help them decide how to divide their weekly allowance between the two boxes.

5. Bank it in

   Teach your children about long term savings and debt. Take them to the bank and open an account for them. Explain that their money will grow when they leave it in the bank. If they are old enough, you can explain to them the full concept of interest.

6. Minimise commercials viewing

   Be sure to explain the objective of television advertisements or commercials to your children, as these commercials can influence your children to spend money. You can also switch to a different channel whenever commercials are shown.

While you should allow your children to spend and make mistakes with their money, you should also be ready to step in and guide them when they need it. Teach your children how to set a savings goal and encourage them to work toward this goal.