These 5 Gifts Can Teach Your Kids Important Lessons About Managing Their Money
As kids, we all had that experience of praying for that Furby / PlayStation / Barbie doll and instead receiving a microscope or book for our birthday.
But as it turns out, our parents meant well, as they were hoping to cultivate our passion for science, reading, and all that good stuff.
Now, as a parent yourself, you might be wondering what gifts can put your child in a better position in life.
And given that financial woes are at the top of just about any Singapore’s list of worries, teaching your kids about personal finance and helping them avoid that YOLO spending phase during the first two decades of their working lives will do a lot more to help them not have to work till they’re on their deathbeds than any amount of tuition.
So instead of spending your money on an iPhone or Nintendo Switch for your child, here are five gifts that can pave the way for a financially sound future.
1. Piggy bank
Singapore may be hurtling towards a transformation into a cashless society, but right now primary school-age kids still receive their allowance in cash.
Just as your earliest memory of saving money probably involves a porcelain money bank in the form of some animal or other, these little containers can be just as relevant to kids in 2018—especially if you, as a parent, get involved by encouraging them to save, and make occasional trips to the bank so all those coins can be deposited into a savings account.
2. Children’s books that teach personal finance
This is a tactic best used when your kids are young and impressionable. When they get older, any attempts to indoctrinate them through literature will be viewed as propaganda.
There’s a wide range of children’s tales spun around the central theme of prudence with money. So instead of bombarding your kids with books that will have them dreaming of being rescued by a prince, get them these instead:
- One Cent, Two Cents Old Cent, New Cent : All About Money – Dr Seuss’s Cat in the Hat explains simple finance concepts, including the concept of interest and the role of banks.
- Rock, Brock and the Savings Shock – A story featuring twin brothers, each of whom gets a dollar a week from their grandfather. One twin spends it all, while the other saves it with interest.
- Alexander, Who Used to Be Rich Last Sunday – A cautionary tale about a boy who spends all his money.
- Arthur’s Funny Money – The story of two kids who decide to run a business to earn the money to buy what they want.
- Amelia Bedelia Means Business – This volume in the Amelia Bedelia series follows the protagonist on a quest to earn money to buy herself a bicycle.
3. Something they can launch a first business with
When I was a kid, inspired by those elderly people hired to collect 10 cents at public toilets, I pasted male and female toilet signs over the bathrooms in the house and tried to collect money from my parents each time they entered
Hopefully your kid has more promising ideas. If he does, providing him with the tools he needs to launch a first business can open the doors to an entrepreneurial future, or at least a culture of self-reliance.
That camera might be your kid’s first step towards a career as a freelance photographer. Those baking supplies might help him make some spare cash whipping up cakes for others.
Don’t forget to offer your moral support and supply ideas and opportunities without being pushy.
4. Debit card
A debit card, when placed in the wrong hands, can lead to your child overspending on rubbish online purchases or useless mobile apps.
But with parental guidance, it can be a great way to teach your teen about budgeting and how to track his spending, especially in this digital and cashless age.
Teach your child to go over his monthly statements and track how much he’s spent on food, entertainment, transport and so on. Use this as an opportunity to talk about budgeting in order to save. Ask him how much he’s spent on food, and discuss ways to bring this spending down a little if it’s too high.
And if your child has started buying things online, this also gives you the chance to discuss how comparison shopping online can save you money.
5. First investment
At some point, your teen will be old enough not just to master the art of saving, but also to understand the basics of investing and why it’s important to start early.
Instead of enrolling him in some scammy investment seminar, let him see for himself the joy of watching your money grow just by waiting, by gifting him with his very first investment.
It doesn’t have to be a large amount, and certainly doesn’t need to be something risky. Singapore Savings Bonds or a small lot of dividend stocks are a good choice.
Don’t let the investment go forgotten until your kid is old enough to want to gather all his assets and leave home. Track it together over the months and years so your kid can see how his money is growing.
When he starts working, he’ll hopefully be inspired to replicate this success as soon as he can.
How do you teach your kids about personal finance? Tell us in the comments!