Got a teenager in the house? Unbeknownst to you, he’s probably spending a ton of time stalking other kids his age on Instagram, marvelling at the fabulous, expensive lives these seemingly untouchable teens live. Without guidance from mum and dad, your kid might grow up aspiring to live such lives, too.
While you should definitely not be making all your kid’s decisions at his age, there are certainly some ways you can gently nudge (not nag!) him onto the path to good money management, something that will serve him well throughout his life, perhaps more so than all those hours of tuition. Here are three ways to do so.
Encourage your child to get a part-time job during the holidays
Not many Singaporean kids work part-time until they reach tertiary age, which is a shame. Getting a part-time job is one of the best ways teenagers can experience earning and saving money, and also gain a sense of the sheer effort that’s needed to put food on the table.
Instead of doling out unlimited cash whenever your kid asks, give him a limited allowance and tell him he can earn more to buy Nintendo 3DS games by getting a part-time job.
If he has no idea how to go about getting one, help out by directing him to the classifieds in the newspapers, or identifying some F&B businesses in your residential area that could use extra help.
Unless you’ve been giving your child a generous allowance, this will be the first time he’s received so much money. Don’t pass up this opportunity to (gently) speak with him about how he can save or invest some of it.
Let him know how much things cost
When your child is in primary school, he usually has no sense of costs. To an 8-year-old kid, $1,000 seems to be about the same value as $100.
But for teenagers, it’s high time they start getting a better grasp of how much things cost in the real world. This also means it’s time for you as parents to start talking about money in more concrete terms.
You can now break down your household costs so your kid knows just how much his mobile data plan is costing you every month, and how much extra you end up paying when he exceeds his data allocation. Explain how much you save and invest each month, and show how that’s going to help you retire eventually.
You can discuss the cost of things like utilities, your family car and your child’s school fees. When it comes time to pick a tertiary pathway, you’ll also be able to discuss how much each school will charge in fees. When your child finally reaches the stage where he’s started working, he’ll have a much more realistic view of how much it costs to run a household, and the sacrifices you have to make to be financially healthy.
When your child is older, you can also start teaching him things like how credit cards work, and how much you get charged in interest and late payment fees when you don’t pay your bills in full.
Get your child started on his first investment
The teenage years are the best time to teach your child how compound interest helps investments grow, and show how getting a head start can dramatically benefit an investment.
Pick a first investment together with your child using cash he’s saved from part-time jobs (if any), or savings gained thanks to ang bao money or cash gifts from family members. You don’t have to use a large amount—let your child be the judge and decide how much he’s willing to put in.
You don’t need to pick a high risk or high yielding investment either. In fact, for learning purposes, something stable and easy to monitor, like savings bonds, could be a good idea. Once the investment product has been purchased, monitor it regularly with your child, and let him feel the satisfaction of seeing his money grow.
Those of my friends who bought their first investment product in their teens became acutely aware of the importance of investing early and regularly. This has given them a big head start compared to many of their peers who, now in their 20s and 30s, still have not started investing.
While the monetary value of your child’s first investment might be insignificant, teaching him about investing at an early age can have a tremendous impact on his attitude towards money as a working adult.
How did your parents teach you about money as a child? Tell us in the comments!