Im­por­tant lessons for fu­ture fi­nan­cial se­cu­rity

China Daily (Canada) - - BUSINESS - By LUHAOT­ING

My 5-year-old son’s win­ter va­ca­tion home­work had an el­e­ment of fi­nan­cial education. He will pre­pare for a short pre­sen­ta­tion about how he would spend the lucky money re­ceived dur­ing the Spring Fes­ti­val.

Lucky money, or ya­suiqian in Chi­nese, is wrapped in red en­velopes and given by el­ders as a wish for good luck in the newyear.

When I wasmy son’s age, the rou­tine was to hand in all the lucky money I got, usu­ally less than 20 yuan ($3), tomy mother, who had the fi­nan­cial power at home. She said she had to give other chil­dren the same amount of or even more money as a re­turn of best wishes.

I was ini­tially a bit sur­prised that the the amountmy son got would al­low him to feel as if he owned a big for­tune of sev­eral thou­sand yuan.

But on se­cond thoughts, I re­al­ized it could serve as an op­por­tu­nity to teach him about money mat­ters.

Are­search re­port by theUniver­sity of Cam­bridge com­mis­sioned by the United King­dom’sMoney Ad­vice Ser­vice showed that chil­dren’s money habits are formed by age 7.

Like many other young par­ents, I hopemy son will get to know about plan­ning, rather than squan­der­ing money when he gets older.

Chi­nese chil­dren’s pocket money is in­creas­ing as house­hold in­comes in ur­ban ar­eas are el­e­vated by eco­nomic growth, and the one-child pol­icy has re­sulted in four grand­par­ents and two par­ents dot­ing on one child.

More than half of middle school stu­dents in south­ern China’s Guangzhou get at least 100 yuan per month in pocket money, ac­cord­ing to a re­cent sur­vey by Yangcheng Evening News. More than 20 per­cent of them even get about 500 yuan a month, which is about a quar­ter of the ur­ban per capita dis­pos­able in­come in Guang­dong prov­ince.

But more im­por­tantly, the chil­dren con­tend with many mon­e­tary is­sues that the older gen­er­a­tion did not face, in­clud­ing mar­ket-driven bank in­ter­est rates, in­creased cap­i­tal mar­ket volatil­ity, il­le­gal fundrais­ing, peer-to-peer lend­ing, sky­high col­lege costs and a later re­tire­ment age.

We should help our chil­dren pre­pare for the fi­nan­cial real world and avoid a fu­ture where they are wor­ried about their fi­nan­cial se­cu­rity.

Par­ents are the num­ber one in­flu­ence on chil­dren’s fi­nan­cial be­hav­ior. Schools could also help stu­dents im­prove their fi­nan­cial lit­er­acy.

I never re­ceived money man­age­ment course­work dur­ing any level of school­ing. The per­sonal fi­nance education re­ceived by most Chi­nese ofmy age was usu­ally from our par­ents and had only one theme— putting money in piggy-banks. I didn’t have any idea about in­ter­est rates un­til I openedmy first bank ac­count as a univer­sity fresh­man.

But things have started to change. In Septem­ber, Guang­dong prov­ince’s education depart­ment made head­lines by launch­ing fi­nan­cial lit­er­acy cour­ses in 36 el­e­men­tary and middle schools for the first time in the Chi­nese main­land. More than 10,000 stu­dents, from grade five to 10, at­tend one course ev­ery two weeks. Guang­dong is one of the coun­try’s most eco­nom­i­cally dy­namic re­gions.

The cour­ses cover top­ics rang­ing from mak­ing short-term and long-term sav­ings goals to risk man­age­ment, and from how banks and stock mar­kets work to how a fi­nan­cial cri­sis breaks out. The pi­lot pro­ject is ex­pected to ex­pand to other parts of the prov­ince in the fu­ture.

To teachmy son some money lessons, I de­cided to di­vide the lucky money into two parts.

One is for him to spend. I would give him 10 yuan per month as an al­lowance and he can de­cide how to spend the money. I hope he could un­der­stand money is fi­nite and it is im­por­tant to make wise choices.

I also took him to a bank and opened a sav­ings ac­count for him with the rest of the lucky money. I want to show him why his fa­vorite sto­ry­book The Beren­stain Bears said “putting money in the bank is like hatching chicken eggs”.

I hope he can grow up into a mind­ful con­sumer and saver, and in the fu­ture, an in­vestor and a giver.

Con­tact the writer at luhaot­ing@chi­

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