Most people have strong feelings and opinions about money. Everyone needs to understand where it comes from, how to spend it wisely, and how to save and invest for the future. Whatever the values and beliefs families place on handling money, financial experts agree that it is never too early for parents to begin educating their children about their financial future. Phil Neilson, chief executive at The Henley Group, believes that the more children learn about money, the more they will be able to make wise financial decisions as they grow. As a father of four children aged between 10 and 17, Mr Neilson suggests that as soon as a child learns to count, they can begin to learn about dealing with money. 'By the time a child reaches five or six, he or she should be responsible enough to understand simple concepts about money, such as the different ways they can spend their pocket money,' Mr Neilson says. Speak in their language When teaching children about money, he says parents should make an effort to think in children's terms, not adult terms. For instance, a young child may ask parents how much money they make, but what they really want to know is not how much parents earn, but why they are unable to buy a certain toy or attend certain events. It is important for parents to use examples or activities that match the child's stage of development, not necessarily the child's actual age. On the topic of allowances or pocket money, Mr Neilson says there is no right or wrong way to provide children with money, and because each family is in a unique financial situation, deciding whether or not to give an allowance is a family decision. The important issue is to ensure that children, regardless of their age, have an appreciation of money and the things they can do with it. Next, parents can start to teach the value of saving. 'Once they learn that saving is a good idea and that it is something they should always do, their financial future will be brighter. For example, if a child wants to buy a new computer game, parents can teach them to save part of their allowance, while still keeping some money available for treats such as soft drinks - or for slightly older children, a visit to the movies. 'This way, children will begin to understand the value of both short-term and long-term saving,' Mr Neilson says. He says parents with teenage children can make investments on their behalf and keep their children involved by regularly showing them the balance book or financial report. Mr Neilson says investing in companies that produce fashion or teenage consumer products adds additional interest to the investment process. Growing up too fast? A recent survey conducted by Louis Cheng of the School of Accounting and Finance at Polytechnic University suggests that Hong Kong children have a mature attitude towards money, placing home purchases as a top priority ahead of toys, which ranked second last. Six questions were answered by 737 children aged between six and 17. When asked how they would spend HK$1million if they had it, 26 per cent said that they would buy a better home, compared to only 4.3 per cent who said they would spend it on toys. If their parents had HK$1million, an overwhelming 40.6 per cent thought their parents would upgrade their home. 'While this shows that Hong Kong children have a rather grown-up attitude towards money, you wonder if they are growing up too fast and if they are materially motivated at too young an age,' Dr Cheng says. 'If they have such a strong desire now to improve their living conditions, imagine how strong it could be when they grow up.' Sidney Sze, Midland Wealth Management chief executive officer, says when children can talk in sentences their parents should start educating them about the concepts of earning, spending, saving, borrowing and sharing. He says birthday money or pocket money should all be treated as income, and parents should help their children to devise a budget. Parents can help young children keep track of their cash flow with the help of a simple worksheet. Children can also learn the concept of budgeting by involving them in household purchases, such as buying groceries. He says all family members should be involved in money management discussions, decisions and activities as appropriate to a child's age. 'During the early years, everyday spending decisions can have a positive impact on a child's financial future so that they make wide investment decisions in later life,' he says. Kids' banking While most banks do not provide accounts for children, HSBC offers an integrated Junior Pack account designed for children for HSBC Premier customers. Deborah Yuen, HSBC head of Customer Growth and Segments, says the Junior Pack allows parents to segregate and manage funds dedicated for their child's future by providing a discrete integrated account which holds a wide range of assets, ranging from deposits to foreign currency and investments, all under the same account number. More education needed Norman Chan, director of the investment services department at Altruist Financial Group, believes that financial planning should be included in the education process. 'From a young age the way we deal with our finances has such an impact on our lives. However the topic is hardly touched upon in our education system,' Mr Chan says. As responsibility for teaching children how to deal with money rests with parents, they should lead by example and introduce their children to the idea of saving for items rather than running a household budget deficit. He says the same principle could be introduced to young children. By saving their allowance, a child could purchase more expensive or useful products at a later stage. Mr Chan's five-year-old son Declan recently saved his pocket money for several weeks to buy a toy car he wanted. Mr Chan says that when it comes to older children, introducing them to the benefits of saving and investment could be demonstrated by doubling any money saved over a three- to six-month period. At a later stage, investment and return could be linked to real-life investments. 'Educating and motivating children to become regular savers and investors will enable them to keep more of the money they earn and do more with the money they keep,' Mr Chan says. When giving children an allowance or pocket money, give them the money in small denominations. For example, if the amount is $20, divide the total into one, two and five dollar coins and encourage at least a few dollars are set aside as savings. Angeline Chin, chief executive officer at the Institute of Financial Planners of Hong Kong, says that to capture the interest of any child parents need to understand what motivates them. 'No matter what the age is, all children will be mainly interested in short-term financial goals instead of medium or long-term objectives.' Ms Chin suggests one effective strategy to encourage saving is to provide a small daily allowance and allow children to save for a particular item. 'Keeping them focused on their financial goal by praising them in their effort to save, and constantly teaching them the basics of good personal budgeting, will teach them about the value of good financial planning and most importantly, the patience to reach the goal they desire,' Ms Chin says.