Today’s generation of kids have a wider array of options than their parents had. This freedom comes with responsibilities and one of the ways parents can help them make the most out of it without being a slave to materialism is if they raise kids who know the true value of money.
For many, the mere act of talking about money with their little ones is crass and unnecessary. But a recent book by New York Times’ money columnist Ron Lieber entitled “The Opposite of Spoiled: Raising Kids Who Are Grounded, Generous, And Smart About Money” sheds light on new and effective ways of incorporating financial knowledge into parenting and introduces new techniques to raising kids who are not entitled but financially savvy.
Here are five simple things parents can do to make their kid a money whiz.
1. Talk to your kids about money early — and often
The first step is to simply talk to them about money. Of course, parents want to shield kids from the real world for as long as possible. But teaching them that dealing with finances will be a part of their future helps them become more responsible early on.
Most parents dodge the topic for fear of fostering greed in their kids but, according the aforementioned book, what it inspires are largely positive traits, such as: modesty, generosity, curiosity, patience, thrift, perseverance and perspective.
Don’t evade their questions; answer and engage them. For instance, if your kid asks if you are rich or poor, don’t simply answer with a ‘yes’ or a ‘no’ but start a conversation by responding with something like, ‘What makes you ask that?’
You can also be the one to start the conversation by having three money jars at home: a “Spend” Jar for impulse purchases, “Save” Jar for large necessary purchases, and a “Give” jar for charity.
Once your child has enough in the “Save” jar, opening a bank account may be the next step to take. Do bring your child along when you open an account, to make him feel invested and responsible for it.
Choose a savings programme that is kid-friendly, like OCBC’s Mighty Savers® Programme, which was specially made for children up to 16 years old. You simply need to open an OCBC Monthly Savings Account jointly with your child.
Deposit S$50 via GIRO monthly into the OCBC Monthly Savings Account for 6 consecutive months and you get the reward. Making those bank visits together with your child can be also serve as a great opportunity to bond.
Teaching your child to keep track of his own savings will be easy as well, since the OCBC Monthly Savings Account comes with an e-statement which you can show your child monthly— a great start to him figuring out how to manage his money in the future.
2. Give your kids an allowance but not for doing chores
The whole point of giving your kids an allowance is to teach them how to save and spend.
Sure, they need to develop a work ethic, but that’s something they should be learning outside the home, according to Lieber. Chores are how they form a deeper understanding and bond with the family for helping out in maintaining the home.
You could also give your kids incentives for saving and making the most of their allowance, by teaching them how interest works, and how it will make their money grow.
Teaching children about interest is easier when they can experience it for themselves. Through your child’s monthly e-statement with the OCBC Mighty Savers® programme, you can show how the money is growing.
With the programme, the amount will grow at 0.4% p.a. instead of the usual 0.05% p.a., if your child makes a minimum S$50 deposit each month, and does not do any withdrawals.
If you already have a Child Development Account (CDA) with OCBC, you’ll get an additional 0.4% p.a. on top of the 0.4% p.a., which brings it to a total of 0.8% p.a.! Explain to your child too, that the more he saves, the faster his money will grow.
But, when they do express a desire to save less or make a withdrawal to spend on something you don’t necessarily agree with; calmly explain why you believe it isn’t needed but allow them to explain their side without saying ‘no’ right away.
3. Allow them to learn from both learning and giving opportunities
As kids grow, they are forming an understanding of how money works. So it’s important for parents to provide practical explanations that are still anchored upon family values.
Fatherly suggests introducing the “More Good/Less Harm” rule. For instance, does buying that imported product make sense when buying local (and helping the economy) is just as awesome?
As for cultivating a habit of giving, you can try explaining to them what charitable causes you support and the reasons why you chose them. This will encourage them to go back to their “Give” jar for causes they believe in.
4. Put them to work
While parents would like kids to enjoy their freedom as much as possible, you would be doing them a huge favour by allowing them to become industrious at a young age.
This does not only make them money-smart but life-ready.
Teach them how to have fun while earning like recycling and exchanging these for cash.
5. Remind them to always be grateful
Even if you’re financially well-off, your kids could benefit a lot from a widened worldview. Teach them to have compassion for kids and families out there who struggle from day to day.
Why not try getting them involved in sports and other activities with kids outside their own school?
Fostering a sense of generosity and understanding for kids with different economic backgrounds teaches them compassion as well as respect.
We hope these tips will help mums and dads raise a generation of money-smart kids who truly know the value of every dollar earned, spent, and saved.
If you want to know more about the OCBC Mighty Savers® Programme, just head on to the OCBC Mighty Savers® website, or visit any OCBC branch.
Important notes: The Terms and Conditions Governing OCBC Mighty Savers® Programme and OCBC Monthly Savings Account apply. Please refer to ocbc.com/mightysavers or visit any OCBC Bank branch for a complete set of terms and conditions.
Deposit Insurance Scheme: Singapore dollar deposits of non-bank depositors and monies and deposits denominated in Singapore dollars under the Supplementary Retirement Scheme are insured by the Singapore Deposit Insurance Corporation, for up to S$50,000 in aggregate per depositor per Scheme member by law. Foreign currency deposits, dual currency investments, structured deposits and other investment products are not insured.