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A new programme urges parents to talk to their children about money

A programme called Kids & Money is being introduced at international schools in Hong Kong, but it won't be attended by students - it's for  parents.

As soon as children begin to speak in sentences, they are learning about money and developing financial habits through watching their parents, according to Paul Stefansson of ipac financial planning.

Mr Stefansson  has conducted seminars at ipac's offices in Hong Kong and Singapore, but ipac is taking the programme into the schools through parent-teacher associations.

One of ipac's founders, Paul Clitheroe, was recently given A$16 million ($95.3 million) by the Australian government to introduce money education into the curriculum.

The main reason for the Kids & Money programme, Mr Stefansson said, was that adults were reluctant to talk about money with anyone, including their children.

Many parents consider it a taboo subject, while others simply do not realise the role they play in their child's financial future.

'Money is a very emotional issue. Because of that, we never teach our kids,' he said, adding that schools were not teaching children  much about it either.

The financial habits children develop could be with them all  their lives, he said, and having bad ones might lead to financial issues such as bankruptcy, emotional problems and relationship difficulties.

'A lot of divorces are caused by bad money habits,' he said.

He suggests that parents discuss money with their children early on and involve them in decisions about spending it on large purchases or vacations.

He strongly recommends an allowance (pocket money) system, which he said was very important in learning money management.

Other methods ipac encourages include a Kids Bank and a Kids Pension Plan, both of which encourage saving and teach the ideas of earning interest and long-term planning.

Basically, the Kids & Money programme is trying to teach parents to talk about money with  their children and be good financial role models.

'Even if [parents] are financially literate, it doesn't impact on how much money [they] save. Intelligence and habit are two different things. So it's not just about being financially literate, it's about good habits and that's where role-modelling comes in,' he said.

'We try to help parents become good role models, which involves the nasty B word - 'budget'.'

As children become teenagers,  they want financial independence and might take on part-time jobs. Parents can help them set up bank accounts and discuss putting some money aside for larger purchases.

Statistics show the importance of learning good money habits. In the United States, more people go bankrupt each year than graduate from university. Sixty per cent of young adults have consumer debt when they graduate and 24 per cent will move back in with their parents because they can't pay their rent, credit card bills or other debt.

Also worrying, according to Mr Stefansson, was that the children of affluent parents were less likely to understand the value of money or how to save it.

'On average, children need to nag their parents nine times to get what they want,' he  said.

Mr Stefansson offers the following words to parents from one of the world's greatest investors - Warren Buffett, the chairman of Berkshire Hathaway: 'Give your kids enough money to do anything, but not enough to do nothing.'



Money talks