Kids must be taught the value of money

China Daily (Canada) - - COMMENT -

Yue­qianzu, or people who are in debt at the end of ev­ery month, has edged out yueguangzu, or people who spend all their in­come by the end of ev­ery month, as the new buzz­word. Un­for­tu­nately, nei­ther group knows how to han­dle money well, and that re­flects the lack of fi­nan­cial ed­u­ca­tion in China.

Some chil­dren re­port­edly re­ceived up to $3,000 as gift money dur­ing Spring Fes­ti­val. But in­stead of help­ing their chil­dren prop­erly man­age the gift money, an overwhelming ma­jor­ity (about 80 per­cent ac­cord­ing to a sur­vey) of Chi­nese par­ents de­cided to use the money in their own way, which shows that they don’t know how to cul­ti­vate fi­nan­cial quo­tient (FQ) among their wards.

Chi­nese people have a long his­tory of man­ag­ing money, and man­ag­ing it well. Shells were in­tro­duced in China way back in Xia Dy­nasty (c. 21st century - 16th century BC). But the wis­dom of our an­ces­tors seems to have been lost on to­day’s so­ci­ety. No won­der, China’s ex­ist­ing cur­rent fi­nan­cial sys­tem and wealth man­age­ment the­o­ries have been bor­rowed from for­eign coun­tries.

Ac­cord­ing to the first FQ In­dex Re­port, is­sued by Ping An In­sur­ance and Hori­zon Re­search Con­sul­tancy Group in 2011, more than 90 per­cent of the univer­sity stu­dents in China are short on FQ. Many don’t even know the ba­sic con­cept of money.

Cul­ti­vat­ing FQ among chil­dren should be an es­sen­tial part of fam­ily ed­u­ca­tion. Par­ents should make their chil­dren re­al­ize that money is a dou­ble-edged sword; it is good if it is put to good use and evil when not han­dled prop­erly. They should pass on their knowl­edge of wealth man­age­ment to their chil­dren through ev­ery­day ac­tiv­i­ties.

The key to de­vel­op­ing a child’s FQ lies in the cul­ti­va­tion of healthy habits. This con­cept has been put into prac­tice in many ad­vanced coun­tries. In the United King­dom, for in­stance, chil­dren be­tween the age of five and seven are in­tro­duced to wealth man­age­ment cour­ses which help them un­der­stand the dif­fer­ent sources of money. Chil­dren in the seven-to-eleven age group are taught to man­age their own money and learn to save for the fu­ture.

In Ja­pan, par­ents usu­ally teach their chil­dren that ev­ery­thing has to be earned through work ex­pect for sun­shine and air. In the United States, FQ is seen as “a happy life plan” for chil­dren as young as three. This means, a three-year-old child needs to rec­og­nize dif­fer­ent coins and bank notes, and chil­dren as young as six are ex­pected to un­der­stand the mean­ing of “my money” and en­cour­aged to do “part-time work” af­ter school to earn ex­tra money.

Such ed­u­ca­tion and prac­tice make chil­dren re­al­ize from an early age that, even if one is born into a rich fam­ily, he/she has to work to make money. Chi­nese par­ents should learn from such ex­pe­ri­ences of for­eign coun­tries and com­bine them with their tra­di­tional cus­toms to teach their chil­dren the value of money and how to prop­erly use it. For ex­am­ple, par­ents should tell their chil­dren that the money they get from elders is not just a gift but also a to­ken of their love and well wishes for them. They should teach their chil­dren how to ju­di­ciously use their gift money — maybe for their ed­u­ca­tion. Per­haps par­ents should play the role of just su­per­vi­sors and let their chil­dren plan how to use the money.

If chil­dren want to spend some of the money on con­sumer goods, par­ents can teach them the dif­fer­ence be­tween ex­pen­sive and cheap goods and the rules of non-waste­ful con­sump­tion.

To teach their chil­dren good money man­age­ment, par­ents should take them to open bank ac­counts, and de­posit a ma­jor part of their gift money in the banks. This will teach the chil­dren that money gen­er­ates money if de­posited in a bank and can be with­drawn when­ever the need arises.

More im­por­tantly, par­ents should do­nate part of their chil­dren’s gift money to teach them the value and im­por­tance of char­ity, which is part of ev­ery per­son’s so­cial re­spon­si­bil­ity. And fi­nally, FQ cour­ses should be in­cluded in ju­nior school syl­labi to teach chil­dren the value of money from a young age. The au­thor is a scholar in fi­nan­cial quo­tient ed­u­ca­tion.

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