We Singaporeans are kiasu and want the best for our children, so what better way than to teach them money skills while they are still young? They will have to deal with money throughout their life, and the skills needed may not be taught in formal education.
While money can be a pretty abstract concept to explain to a young mind, there are ways to introduce it in a fun manner so as to teach your child the lifelong skills of managing money. GET.com shows you 5 fun and easy ways you can start today:
1. Let Them Pay For You At The Cashier
Allowing kids to handle money on their own is a great way to introduce them to the use of money.
Depending on their age, you can even ask them to tell you how much change they can expect after handing the $10 bill to the cashier for a packet of biscuits.
They can then practise counting the change to ensure they've got the right amount back.
2. Making Money Decisions
One of the best ways to get your child to learn about money is to bring them shopping with you at the supermarket. You can give them $2 and let them choose how to spend it.
Help them by giving them some options – should you choose to buy that packet of sweets that can last you 10 minutes, or that packet of grapes that can last for a few meals as a dessert?
This will teach them to make better choices about the things they want to buy and guide them to make rational choices instead of emotional ones.
Or you can always turn it into a game. An older child might be able to work with you on your grocery budget, and look for the cheapest brand you can find for the item you want.
3. Make Them Work For Money
Working for money is one of the most efficient ways to make your child understand that earning money is hard work - which will in turn help them understand the importance of not splurging unnecessarily.
If your child requests a certain toy, teach them to work for it.
Assign them chores (especially those that they may not like!) such as clearing the trash, folding clothes or watering the plants. Reward them with small amounts of money so that they can save up over time.
This allows them to understand that it takes time to accumulate wealth, and when they've saved up the amount they want, they might have changed their decision of spending it on the initial toy.
4. Show Them The Importance Of Compound Interest
If you are a regular saver yourself, you already know how powerful compound interest can be. This is one of the most powerful concepts in personal finance and is worth drilling it into your child's mind.
There are several ways to encourage them to save and show them how compound interest works. You can either encourage them to save by rewarding them dollar-for-dollar, or open a bank account for them and show them the accumulated interest.
There are banks with dedicated accounts for children with no fall-below fees that accept a low minimum deposit. By opening a savings account, you can also make use of the opportunity to introduce the idea of banks to them and get them acquainted with it at a young age.
5. Gamify Money Management
What could be better than turning money management into a game? Other than Monopoly, there are games such as Cashflow for Kids which helps children to discover how money works and teach them the difference between an asset and a liability.
Even better, invite a few of their friends over to play together. Doing this makes learning a fun experience and by managing their "own money" in the game, they get a more concrete experience!
"Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime."