Training to count on
Take your cue on teaching dollar sense to youngsters from top financial advisers with children of their own
Every parent knows how hard it is to resist a child's demands for money to buy games and toys, and how difficult it is to teach children the concept of saving.
These days, teaching the young - whether they be toddlers or teenagers - that money does not grow on trees may be a lot easier than convincing them that, in this era of deposit salaries, cash is not dispensed from ATMs for free.
Teaching children good money habits - such as the need to save - has lifelong benefits. Financial experts believe that children who do not learn these lessons may have to suffer the consequences over a lifetime.
So, how can parents set about teaching their children the value of money?
Many financial planners suggest that when children are old enough they be invited to take part in planning the family budget. Let them see the bills that have to be paid each month. Explain to them how there is only a certain amount of dollars a month to pay for food, clothing, entertainment and saving for a rainy day. Point out the dangers of getting into debt (credit cards). Explain that ATM machines are not magic money dispensers that dole out endless amounts of cash.
Derek Young, chief executive of ipac Asia, says the best time to start teaching children about money is when they stop trying to chew it. He says an increasing number of ipac clients are involving their teenage children in financial planning meetings.
However, some parents do not teach their children about money, believing the subject should be avoided. Others say they do not have the time. Still others believe they do not have sufficient money, so talking about it is embarrassing.
'Parents should take the time to teach children about money regardless of income and they should start when the children are young,' Mr Young says.
The experience of making money and saving money can start early in the home.
Even young children can do jobs around the house to earn pocket money, and can be encouraged to save part of their pocket money or lucky money received as gifts in 'red packets'.
Many Hong Kong teenagers spend an extraordinary amount of time studying, but wherever possible they should be encouraged to get a job. Working helps young people to understand that money comes at a cost, and effectively dispels fancy notions of a money-tree or limitless ATM resources.
Playing games based on financial principles, such as Monopoly, or helping with the shopping can also help to introduce children to the concept of handling money.
Maria Chan Suet-wai, assistant business manager, AXA China Region Insurance, says the appropriate age for initiating discussions about money and the merits of money management varies depending on the child. She says it is important to match money-related talk or activities to the child's stage of intellectual development.
'If you don't teach them the skills to make educated, responsible decisions with their money, you will be holding back a valuable lesson that should be taught. Learning how to manage money successfully is a skill they will have for life,' Ms Chan says.
Learning comes from experience. Just talking about money will not get the job done. Learning how to earn, save and spend money appropriately comes from real-life experience. If your child does not have an allowance in place already, consider starting one. When discussing an allowance with your children, relate it to your own life. Explain that, to buy something, you must first work to earn money, and then save enough to buy the item you like.
It is only when children have their own money to manage that they can put good money management lessons into practice.
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Just talking about money will not do. Learning how to earn, save and spend money appropriately comes from real-life experience.
When discussing an allowance with children, relate it to your own life. Explain that, when you want to buy something, you must first work to earn money, and then save enough in order to purchase the item.
If you do not teach your children the skills to make educated, responsible decisions with their money, you will be holding back a valuable lesson.
Learning how to successfully manage money is a skill children will have for life.