Raising Money-Wise Kids

To become financially savvy adults, children should be taught how to be wise with money from a young age. Here are some tips for parents with kids aged between 4 and 12 years.

Play Board Games
Parents can start their pre-schoolers on the road to understanding money by playing with them board games such as Snakes & Ladders and Monopoly. This allows them to do mental calculations, hone their arithmetic and decision-making skills.

Stack Up Coins
The simple act of getting a pre-schooler to group and stack up coins helps him to understand that different coins have different values. Going further, parents can get their child to pair up coins in different combinations to get a specific amount. This will help them to familiarise themselves with various denominations and manage spare change.

Good Saving Habits
Teach a child to save and be thrifty. This is important. One way to inculcate responsibility is to give the child a cash allowance.

Make this a learning tool for him. Guide the child. He will also learn how to set priorities, make spending decisions and live within a budget. As a general guide:

60% can be spent on basic needs, like school canteen food;
10% can be saved for wants, like a toy;
20% can be saved for emergencies;
10% can be donated to charity, to foster the spirit of giving.

To make the whole experience more realistic, take the child to a bank to open a savings account and deposit the 20% savings for emergencies into it. The savings accounts under the OCBC Mighty Savers? programme give rewards like stickers to make saving more fun. Explain to your child that in the bank, the money will grow as it accrues interest. You can also encourage him to save by matching his savings dollar-for-dollar.

For older kids, the daily allowance can be given on a weekly basis if they have successfully managed the money.

Stretch the Dollar
Teach your child how to get more out of his money. For instance:

Encourage him to walk short distances instead of taking the bus
Make notebooks out of recycled paper instead of buying one
Visit the library instead of buying new books
Pack lunch instead of eating at the school canteen
Bring a water bottle to school instead of buying bottle drinks